Avoid Estate Tax

Avoid Estate Tax. How do you ensure that most, if not all of your wealth will be passed down to your children and grandchildren? Without good planning, estate taxes can take away as much as half of your wealth.

Avoiding Estate Taxes

Here are the most effective ways to reduce estate taxes legally:

Marital Trusts / AB Trusts

Each person is entitled to a $1 million exclusion. By combining your $1 million exclusion with that of your spouse through a marital trust, you and your partner will together have a $2 million total exclusion. Also known as ‘A-B’ trusts, a ‘B’ trust will be set up upon the death of the first partner; this trust will accept that partner’s share of assets in lieu of the surviving partner.

Annual Gifts

You can also consider donating $12,000 per year to any number of recipients for any purpose. This amount will be tax free.

529 plans

The 529 plan is a college savings trust, and allow up to $55,000 to be given per recipient per year. Amounts that have been gifted can be used for an entire range of educational purposes, and remain under the legal control and ownership of the donor.

QTIP Trusts

A QTIP trust allows couples to defer estate taxes until the second spouse passes away.

Life Insurance Trusts

A life insurance trust is another way to lower your estate taxes, by removing the value of life insurance proceeds from your estate.

Avoid Estate Taxes

Managing your estate taxes well is key to sound asset protection. This will ensure that your surviving spouse, your children and grandchildren will benefit as much as possible from your wealth.

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