You are here: Home FAQ FAQ Understanding Estate Taxes 15. How To Reduce or Eliminate Estate Taxes Summary Chart

15. How To Reduce or Eliminate Estate Taxes Summary Chart

1. If Married, Use Both Exemptions
Living Trust with Tax Planning
• Uses both spouses’ estate tax exemptions, doubling the amount protected from estate taxes and saving a substantial amount for your loved ones.

2. Remove Assets From Estate
Make Annual Tax-Free Gifts
• Simple, no-cost way to save estate taxes by reducing size of estate
• $13,000 ($26,000 if married) each year per recipient (amount tied to inflation)
• Unlimited gifts to charity and for medical/educational expenses paid to provider

Transfer Life Insurance Policies to Irrevocable Life Insurance Trust
• Removes death benefits of existing life insurance policies from estate
• Included in estate if you die within three years of transfer

Qualified Personal Residence Trust
• Removes home from estate at discounted value
• You can continue to live there

Grantor Retained Annuity Trust / Grantor Retained Unitrust
• Removes income-producing assets from estate at discounted value
• You can continue to receive income

Limited Liability Company / Family Limited Partnership
• Lets you start transferring assets to children now to reduce your taxable estate
• Often discounts value of business, farm, real estate or stock
• Can protect the assets from future lawsuits, creditors, spouses
• You keep control

Charitable Remainder Trust
• Converts appreciated asset into lifetime income with no capital gains tax
• Saves estate taxes (asset out of estate) and income taxes (charitable deduction)
• Charity receives trust assets after you die

Charitable Lead Trust
• Removes asset from your estate, saving estate taxes
• Income goes to charity for set time period, then trust assets go to loved ones

3. Buy Life Insurance
Through Irrevocable Life Insurance Trust
• Can be inexpensive way to pay estate taxes and/or replace charitable gifts
• Death benefits not included in your estate

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