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Estate tax, also known as inheritance tax, can be a significant financial burden on your heirs after your passing. However, there are ways to legally avoid or minimize estate tax. By taking advantage of exemptions, deductions, and careful estate planning, you can ensure that more of your wealth passes to your loved ones rather than to the government. Here are some strategies for legally avoiding estate tax.
1. Utilize the estate tax exemption: The IRS provides an estate tax exemption, which is the amount of assets that can be transferred tax-free at the time of your death. As of 2021, the federal estate tax exemption is $11.7 million per person. This means that if your estate is valued at less than $11.7 million, it will not be subject to federal estate tax. By taking advantage of this exemption, you can legally pass on a significant amount of wealth to your heirs without incurring estate tax.
2. Gift assets during your lifetime: Another way to reduce your taxable estate is to gift assets to your loved ones during your lifetime. The IRS allows for an annual gift tax exclusion, which is currently $15,000 per recipient. By making gifts within this exclusion amount, you can transfer wealth to your heirs tax-free. Additionally, any gifts made within this exclusion amount do not count toward your lifetime estate tax exemption. By utilizing this strategy, you can gradually reduce the size of your taxable estate while providing financial support to your beneficiaries.
3. Establish a trust: Trusts are commonly used in estate planning to protect and distribute assets to beneficiaries. One of the key benefits of a trust is its ability to minimize estate tax. By transferring assets into an irrevocable trust, those assets are no longer considered part of your taxable estate. This can significantly reduce the amount of estate tax your heirs will owe. Furthermore, certain types of trusts, such as charitable remainder trusts and generation-skipping trusts, offer additional tax advantages.
4. Take advantage of marital deductions: Married couples can benefit from the unlimited marital deduction, which allows for the tax-free transfer of assets between spouses. By leaving assets to your spouse, you can avoid estate tax until the second spouse passes away. Additionally, a properly structured trust, such as a bypass or AB trust, can further maximize the use of the marital deduction and minimize estate tax liability.
5. Seek professional estate planning advice: Estate tax laws are complex and continuously evolving. By consulting with an experienced estate planning attorney or tax advisor, you can develop a personalized plan to minimize estate tax while achieving your financial and legacy goals. A professional can help you navigate the intricacies of estate tax laws, maximize available exemptions and deductions, and ensure that your estate plan is in compliance with current regulations.
In conclusion, with careful estate planning and strategic use of exemptions and deductions, you can legally avoid or minimize estate tax. By taking advantage of the various options available to you, you can ensure that more of your wealth passes to your heirs rather than being depleted by taxes. It’s important to stay informed about changes in estate tax laws and seek professional advice to develop a comprehensive estate plan that protects your assets and provides for your loved ones.
Jesus Christ. I will just bury gold, cash, and artwork. Let my kids use the cash to never need to deal with day to day expenses (groceries, gas, clothes, ect…). Gold they can sell/trade at their pleasure, though I know gold can't be sold past 1k of value without tax yearly. Trading will help here. Artwork will be similar to gold, just sell as you please. I'll leave enough money in the bank to cover taxes on the house/property after taxes. Everything else will be buried in the ground. Fight me irs.
Hello. Mother died and my father is over 90 and incapacitated. I have power of attorney over his estate. When he dies I’ll inherit just under 1 million in stocks (depending on growth) and some cash. How much will the govt want and how can I legally avoid giving it to them? We are in California.
Could you give $3m to three kids and put anything extra into a bypass trust?
people say it goes to the kids tax free…. but… don't they have to pay a high % when they declare that money the next year since it was a gain ? if this is right then it is not "tax free" they just catch you later on still
who has control over investing liquid assets in bypass trust?
Oh he is from my state of Georgia cool! Fellow Georgian!
Thanks for the video brother! Great content. PS. I see you are using a lav mic! probs on that! Set the overall input of the audio much lower, bc you are still peaking out. Or put a "gate" on the audio, which will keep it from clipping. Love the content!
Thanks for your advice! Happy new year, viewers! For those who are watching this on 2021, you may want to check my related video on https://www.youtube.com/watch?v=OGvt_IRYkt8&t=83s&pbjreload=101
If in the situation of a family business, can an owner gift shares of the business directly to the kids while alive or in a bypass trust?
Somethings got you fired up today 🙂
Excellent practical info – appreciate ya!
In other words this is a legal way lawyers can help the wealthy shelter there assets from an estate tax eventhough they have the assets to pay the tax. No different than a lawyer helping the middle class to shelter there assets for Medicaid eligibility. In both cases the taxpayers have to come up with the shortfall of revenue the only difference is if you escape paying a inheritance tax you are considered brilliant and in the other case you shelter your assets for Medicaid elgibility you are considered a cheater with no moral standards.
Josh, your audio is distorted when you talk louder.
Sounds like donating a portion of estate to a charitable organization creates a possible nightmare for your heirs
OMG, sir…..this is starting to be uncanny!!….as more than one of your videos has been timely, (at least in my case). You may recall that over the past four years, I’ve travelled extensively between Massachusetts (my current home) and Tennessee (my parents retirement residence), to assist my parents as they dealt with “age issues”. Mom passed last year (dementia and strokes) and last week, my Dad passed (mesothelioma)…..and due to my Dad’s extensive “anal retentive” personality (for which I am now eternally thankful to him for!!!)….he left incredibly organized records, and left me as the Executor. A home, two vehicles, a very stable and large IRA, a “brunch of Blue Chip stocks, and large “liquid” (checking, money market account, CDs). On top of that…..tens and tens of thousands of dollars (face value) U.S. silver and gold ((1870s and forward)), Crowns, Canadian and a very expensive stamp collection. He left a note, and implored me to remove the coins and stamps “quickly”, so that they would not be part of the estate. His records indicate that both collection’s face value is minuscule compared to the value to coin and stamp collectors. Me, being neither a coin or stamp enthusiast, did as my Dad asked…..he also asked that I figure out a way to divide the collection between my brother and me (he left his insurance to my sister). Dear God……I think my Dad left me with a new “career”! As always, I never leave one of your videos without having learned something new. Bravo-Zulu, sir!
This is truly AMAZING!
Thank you.