9781601386960 by Unknown

Author:Unknown
Language: eng
Format: epub
Published: 2010-05-28T13:30:27+00:00

Chapter 9

Lowering Your Federal Estate Taxes

It would be nice if you did not have to pay any federal estate taxes (or any taxes, for that matter). The next best thing to do is to consider how you can reduce what do you have to pay.

It is important to do all that you can — within legal restraints — to avoid paying high tax rates. In most cases, you will not be able to avoid all your taxes, or even most of them. For those who are quite wealthy, there are always strings and loopholes to be found, but an expert attorney will be necessary for this — even good financial planning attorneys will point you down the clear path rather than one filled with risky maneuvers.

There are two ways in which anyone can reduce the estate tax they pay: 1. Make gifts during your lifetime.

2. Use an irrevocable trust.

aPEstateinFl.indb 155

3/17/10 8:46:35 am

156 The Complete Guide to Planning Your Estate In Florida Making Gifts During Your Life

One of the first and best ways to lower what you have to pay is to have less to pay on. If you give away your property while you are still alive, you will remove any potential tax on that estate after your death — you no longer own it, after all. There are several details to explore here. Let us break them down.

Federal gift tax exclusion

You can make gifts of up to $13,000 per person per calendar year that are considered tax-free. When you use this method to reduce your taxes, you will remove a substantial amount over the course of time (you can give away more than $13,000 per year, if you give it to several people). If you have children, grandchildren, or others whom you would like to provide funds for, this is an ideal way of making that happen.

In addition to these gifts, you can also give gifts of any amount to other causes. This includes giving payments for someone’s medical costs or their tuition. You can also give away your property in any amount to tax-exempt charities.

Interest in a family business

In some situations, if you give some minority interest in a family-owned business to someone, this can reduce your taxes. A minority value is less than that of the value of a majority interest, which will keep it underval-ued. Because of the minority business discounts that are available, minority interest can be valued much lower.

In addition to this, realize that this tactic will only work for an existing business, not one that you create and place major assets such as your home in.

If the business is designed solely to reduce estate taxes, it will not work.

aPEstateinFl.indb 156

3/17/10 8:46:35 am

Chapter 9: lowering Your Federal Estate Taxes 157

Life insurance

Another way to lower your estate taxes is through life insurance. If you have a life insurance policy at the time of your death, the benefits from the policy will be included in your estate’s taxable property. If this policy is large enough and

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.