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3 Ways To Minimize Your Estate Tax Weight

Posted February 1, 2022

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As you look back over all the wealth that you have earned and accumulated over the years, you begin to think about what will happen to it when you are gone. Where will it go? Who will receive it? Do you have an estate plan in place so that you can be sure your hard work will live on and benefit those you love?

Creating an estate plan is step one. Step two is understanding how gift taxes and estate taxes could impact the amount you pass on, and the final thing to think about is how to minimize the impact these estate and gift taxes have.

NerdWallet defines a taxable gift as giving money or assets away without expecting to receive anything in return. It also establishes an estate tax as the tax on your taxable estate, including cash, securities, and other properties that are passed on to your heirs.

Now that you have a general understanding of these taxes, you can begin to find ways to minimize the impact they will have on your estate plan.

One way to minimize the impact of these taxes on your assets is to give during your lifetime. Whether it’s paying for a child’s wedding, a grandchild’s college, or a donation to a charity, you can generously give throughout your lifetime to reduce the size of your estate and thereby reduce the taxes on your estate. However, be sure to know what qualifies as taxable gifts and estates and how they can impact your finances.

A second way to minimize your estate tax burden is to use irrevocable trusts to remove assets from your estate. Unlike a revocable trust, an irrevocable trust is a type of trust where its terms cannot be modified or terminated.

An irrevocable trust can help minimize your estate tax burden through unique features, like spousal lifetime access trusts (SLATs), or charitable remainder annuity trusts (CRATs). You can move some of the largest assets out of your estate and prevent those assets’ future gains from being included in your estate. Finally, the third way to minimize your estate tax burden is to consult with Thayer Financial’s team. From the initial process of setting up an estate plan to strategizing on the best ways to protect your assets, Thayer Financial is there for you. Our team works as a fiduciary 100% of the time, and we wouldn’t have it any other way.

Thayer Financial, L.L.C. (“Thayer Financial”) is a registered investment adviser offering advisory services in the State of North Carolina and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. This website’s presence on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute. Follow-up or individualized responses to consumers in a particular state by Thayer Financial in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or according to an applicable state exemption.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Thayer Financial, L.L.C., unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

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