Many people put off making an estate plan because they believe it is only beneficial for wealthy individuals. However, that is not the case. Estate planning is crucial for every to protect their hard-earned assets. There are several benefits to creating an estate plan. One significant advantage is that federal estate taxes can be reduced by using numerous legitimate estate planning techniques. If you are considering establishing an estate plan, contact a skilled Montgomery County Estate Planning Attorney who can help you utilize various estate planning techniques to minimize your estate taxes. Please continue reading to learn about some of the most common ways to reduce estate taxes when planning.
When estate planning, how can I reduce estate taxes?
If you want to minimize the value of your estate taxes when estate planning, you should consider gifting. Fortunately, married couples can give annual tax-free gifts to any number of people each year. Notably, in 2023, the annual gift exclusion increased to $17,000 from $16,000 in 2022. You can give a maximum of $17,000 to multiple parties yearly without incurring gift tax liabilities. Therefore, married couples can strategically use their estate planning by gift-splitting to give up to $34,000 without the gift being taxable. If married, couples can benefit from this approach, as they can gradually transfer a significant amount of money to their desired beneficiaries while minimizing estate taxes by giving their children and grandchildren lifetime gifts.
Moreover, there are ways that you can gift to minors without facing gift tax liabilities. The Uniform Gifts to Minors Act (UGMA) allows individuals to transfer assets to underage beneficiaries. The Uniform Transfers to Minors Act (UTMA) this law allows minors to be named as beneficiaries to receive gifts such as real estate, patents, money, real estate, valuable artwork, antiques, and other securities without the aid of a guardian or trustee. However, until the beneficiary turns of age, the assets they gift are considered part of the estate. Once no longer a minor, they can take control of the assets.
Furthermore, you may think about charitable gifting. Not only will you be able to support the philanthropic causes you are passionate about, but you will also be able to reduce estate taxes. Assets gifted to a qualified charity upon death will be deducted from their taxable estate. That said, you can donate securities such as bonds and stocks without being subject to capital gains tax.
When estate planning, it is imperative to be mindful of how you can minimize estate taxes. To protect your hard-earned assets, contact a seasoned Montgomery County Estate Planning Attorney at JDKatz today. Our firm can help you use various estate planning techniques to minimize your estate taxes.