Ways To Reduce Estate Taxes With Proper Estate Planning

If you’ve worked hard to build wealth, you deserve to hang on to it so your loved ones can benefit later. If you plan your estate properly and with the help of a lawyer, you can avoid having your hard-earned assets trickle away as tax payments in the event of your death.

Here’s what you can do to keep your estate from getting hit hard by estate taxes:

Establish a Trust to Store Your Assets

Setting up a Trust is an excellent strategy, and it doesn’t necessarily mean a banker controls it. Instead, you can name a family member as the trustee.

There are many types of Trusts that protect your assets from unnecessary taxation. A credit shelter Trust protects assets if a spouse dies. A qualified personal residence Trust can prevent your property from being taxed with the rest of the estate.

Let Your Life Insurance Cover Your Estate Taxes

If you know you will have a sizable estate and an unavoidable estate tax, consider investing in a life insurance policy to cover that tax. Make sure you buy a policy with an “irrevocable life insurance Trust.” Such a policy helps you avoid probate, and the assets go directly to your beneficiaries.

If an Asset Will Grow, Use Your Exemption Early

Each of us has a lifetime exemption of $13.9 million from estate taxes. Suppose you own a business worth $5 million now but may be valued at $11 million after you die. In that case, you may want to give it to your children while you’re alive and claim that lifetime exemption now. That way, the exemption can cover the value before it exceeds $13.9 million.

Begin Bequeathing Before You Go

Every year, you can give away up to $19,000 to anyone you choose tax-free. Doing this can reduce your estate’s value and the tax burden that may come after you pass away.

A Cincinnati Estate Lawyer Can Help Reduce Your Tax Burden

At Donnellon, Donnellon & Miller, we have extensive experience helping individuals and families reduce the tax burdens on their estates. When you work with a lawyer on our team, you’ll get the personalized attention you need to create an estate plan that works for you. Contact our office today at 513.891.0787 or complete our online contact form to schedule an appointment.