Are you doing your estate planning and trying to determine how you can reduce the overall value of that estate? You don’t want to lose your assets, of course, but you know that there can be some tax benefits if you have a smaller estate.
Fortunately, there are numerous ways that you can address this. The best thing you can do is to plan well in advance so that you have time to execute everything properly.
There are three common ways that people reduce the value of their estates during their lifetime.
1. Giving gifts in advance
Did you know that you do not have to pay a gift tax on anything up to $15,000 for a single person or $30,000 for a couple? This applies to any number of people. If you have three children, for example, you and your spouse can give each child a combined $30,000 per year for as long as you want. This slowly brings down your total estate value by essentially just giving your heirs a small portion of their inheritance early.
2. Putting the money into a trust
Another option is to move money into an irrevocable trust. When you do this, it is no longer your money. It is owned by the trust and distributed by the trustee. You still get to decide where the money goes and how it is used, but it’s no longer your money or part of your estate.
3. Giving to charity
Finally, you can always give money to charity. If you were planning to donate anyway, doing it through a charitable trust or other means can actively lower your estate’s value, while still doing good with your money.
Whatever you decide to do, just make sure you are well aware of all of the legal steps to take as you create the right estate plan. An experienced attorney can help you better explore your options.