Michael E Weintraub Esq according to U.S. federal estate tax laws tax is imposed. On the transfer of an estate upon the demise of the owner. However, currently, the government does not tax estates that are valued at $11.58 million or less. Although the generous exemption limit means that most Americans will not have to pay estate taxes. Some wealthy people may still be liable to pay estate taxes. Michael E Weintraub esq delves into some effective methods of reducing your estate tax liability:
Michael E Weintraub Esq Spend Your Wealth
Spending wealth is a guaranteed method of reducing the estate valuation and, therefore, the applicable estate tax. However, as may be apparent, it is a solution that is workable only. For those who have no fear of running out of money during their lifetimes. Spending money also does not allow you to create assets, so in effect, you are engaging. In the consumption of wealth solely for the enjoyment, and to reduce the tax burden.
Michael E Weintraub Esq Gift Your Assets
If you are comfortable with parting with your wealth during your lifetime. You can gift your assets to those your love or to causes you support. Again, you will need to do it in such away. That you should not have any danger of running short of money. When you are alive cautions Michael E Weintraub esq. However, American tax laws are designed. To prevent gifting to reduce tax liability. You are allowed to only gift up to $15,000 per year without any tax implication.
Establish Trusts, Recommends Michael E Weintraub esq
Couples who are married can set up AB Trusts or ABC Trusts to reduce or even eliminate estate taxes, both federal and state. However, keeping in mind the higher exception limit and the exemption portability allowed may make it unnecessary. Since 2011, the unused federal estate tax exemption allowed to one spouse. Can be used by the surviving spouse, thus making the exemption benefit portable.
If you are in a relationship, including a same-sex relationship. Way of reducing or eliminating estate taxes. It is because due to the portability benefit, a married couple can have a combined. Estate tax exemption of $23.16 million from federal estate tax.
Advanced Estate Planning Methods
There several advanced techniques for reducing estate tax liability that permits maintaining a lifelong income stream. For example, a Family Limited Liability Company is effective not only for tax reduction but also for asset protection. By setting up Spousal Lifetime Access Trusts, married couples can use yearly. Exclusion gifts and exemption of lifetime gift tax to benefit each other. A charitable trust allows you to claim an income tax deduction at the time of funding the trust. And after your passing, the trust gets a charitable estate tax deduction.
While all the above methods are effective for reducing estate taxes, if you have substantial wealth and property, it may merit moving to a state that does not impose an estate tax or inheritance tax. Even though it may be a drastic step, it can easily save your heirs a lot of money in death taxes.