Having a proper estate plan in place has many benefits, but one of the most important upsides of making a plan could be the opportunity you have to lower how much you will owe in estate taxes. If your estate is worth more than a certain amount, a federal estate tax could take some of the money that you wanted to go to your beneficiaries. A Woodland Hills estate tax planning attorney can help you plan around this tax and leave more assets behind for your loved ones.
Can Charitable Giving Reduce My Estate Taxes?
Giving money away to charity is one effective way to reduce how much you could end up owing in estate taxes. This is because giving away money shrinks the size of your estate. You can also talk to our estate planning attorneys about how your estate can continue to support important causes once you have passed away. We could help you set up a charitable trust or another way of giving charitable gifts and lowering your potential estate tax liability.
Can I Use Trusts to Lower My Tax Burden?
A charitable trust can be used to make donations and lower your estate tax burden, but that is not the only kind of trust that could be a good fit for your estate. There are types of marital trusts that allow you to leave behind valuable assets for your surviving spouse while taking advantage of the maximum personal estate tax exemption.
What Should I Do With My Life Insurance Policy?
Your life insurance policy could also be placed into a trust. This can be used for term policies or whole life policies. The trust is irrevocable, which means that you will not be able to change it once you set it up. You can be sure that the proceeds of the policy will be paid out to your beneficiaries once you pass away though, with the minimal tax burden involved.
Will Giving Gifts Now Reduce Estate Taxes Later?
Another way to lower your estate tax liability is by giving away gifts. We mentioned how making charitable gifts can be a smart move, but you do have to remember that there are gift taxes to worry about when you give money to a loved one. Give more than $13,000 to a person in one year, and they have to worry about taxes.
The good news is that $13,000 is actually a rather significant sum and your spouse has the same, separate limit. That means that you could give away $26,000 to each of your children each year and leave behind a smaller estate when you pass away.
Contact Our Legal Team
When you are ready to make a comprehensive estate plan of your own, contact the Law Offices of Yacoba Ann Feldman. Whether you have a massive estate or you just have a few important assets that you want to pass on, our law firm is ready to help you.