3 Ways To Minimize Your Estate Tax Weight
Posted February 1, 2022
Posted February 1, 2022
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.
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