Part of creating a comprehensive estate plan is figuring out a way to reduce or eliminate estate taxes. Unfortunately, estate planning laws are complicated and difficult to understand. To guide you through the process, our Dallas-Fort Worth estate planning lawyers have put together four tips to help you avoid or reduce estate taxes.
#1: Establish a Trust
A trust is a common estate planning document that many people use to reduce or avoid estate taxes. It’s important to note that if your trust doesn’t hold any assets, it’s not providing any benefit to you or your family. You must place assets in your trust to see tax reduction benefits.
#2: Give Gifts to Family
Another way to avoid estate taxes is by handing off portions of your estate to your family through gifts. You can give anyone person up to $16,000 (updated in 2022) tax-free or up to $32,000 for a married couple with joint tax returns. In total, you can give up to $11.7 million of your wealth as gifts before having to pay gift taxes. Don’t just jump into this gifting option without the proper education as it can get tricky – read more here.
#3: Charitable Giving
Making charitable donations also has many tax advantages. To maximize tax benefit, it is important to make donations to a recognized 501(c)(3) charity or recognized foundation and keep proper records. If you are giving anything other than cash then you must understand how the value of your gift will be treated by the IRS.
Learn more about charitable giving and estate taxes in our blog post here.
#4: Seek Legal Guidance
Finding the right tax break options for your estate plan isn’t always the most obvious option. The best way to determine a way to avoid estate taxes is by having an experienced attorney guide you through the process. An attorney can work with you to determine which estate planning steps you should take to protect your assets while also considering tax break advantages.
If you need help creating a comprehensive estate plan, contact our Dallas-Fort Worth estate planning lawyers today at (972) 945-1610 to schedule a consultation!