When it comes to estate taxes, you should always have one thing on your mind — implementing strategies to help reduce or eliminate the tax.
While this is easier said than done, there are many strategies that might be applicable to your particular situation. Below are several of the best ways to reduce estate taxes:
-- Marital transfers. Since lifetime gifts are not subject to estate taxes, this is one smart move to make.
-- Give gifts to children and grandchildren. You can make annual gifts of up to $12,000 to children and grandchildren.
-- Setup an irrevocable life insurance trust.
-- Implement a family limited partnership.
-- Use a private annuity.
-- Opt for a charitable transfer.
As you can see, there are steps you can take now to reduce estate taxes on your loved ones in the future. Depending on your financial situation, you may be able to completely eliminate estate taxes from the equation. Even if you aren't able to do this, taking a few of these steps can help you save your beneficiaries quite a bit of money once you pass on.
Now that you understand the best ways to reduce estate taxes, you need to make changes to your estate plan to ensure that you are moving in the right direction. When you take a concise approach to this process, you will never guess as to whether you are on the right track. Instead, you can make regular decisions that you can feel good about. And all along, you will know it will benefit your loved ones as well.
Source: FindLaw, "10 Ways to Reduce Estate Taxes," accessed May 26, 2016