An estate tax is a type of death tax that is imposed on the decedent’s estate before any distributions are made to beneficiaries. Estate taxes are different from inheritance taxes, which actually are imposed on the beneficiaries themselves. Estate taxes can be a burden because some people still might have to pay them after their death, which can put a financial strain on your family. However, there are some ways that you can maintain and even minimize your estate taxes.
What Are the Different Ways I Can Decrease My Estate Tax Amount?
– Leave assets to your spouse: If you are married upon your death, you can leave an unlimited amount of money to your spouse without acquiring any tax (as long as your spouse is a US citizen). Each of you, as taxpayers, will also receive the tax exemption, which is excluded from the federal estate tax. However, in order to ensure that both spouses can use the full exemption amount, you should probably create a will or living trust.
– Contribute to charity: Money that goes to a charitable organization at your death can also be exempt from federal estate taxes.
– Start giving away money during life: Instead of leaving all of your assets to be distributed after your death, you can start giving away your money to your beneficiaries now while you’re still alive. Removing assets from the estate before your death will result in huge estate tax savings because they will be included in the gift tax exclusion.
– Create a good estate plan: Meet with our skilled estate planning attorneys to help you implement estate planning options. Creating an estate plan will help minimize the impact of your estate taxes on your family and loved ones.
– Take away life insurance proceeds from your estate: If you own your own life insurance, the proceeds are included in your taxable estate. This means that you could create an irrevocable life insurance trust that will hold that insurance policy and remove the death benefit from your estate. This trust will also allow you to remove the value of your life insurance from the estate.
Massachusetts is one of the states that collects estate tax, so it’s crucial that you know how much you’re expected to pay and how you can start saving. Contact the law office of Brandon L. Campbell today for a free phone consultation.