Cranberry Township residents often hope that they will be able to leave their loved ones something when they pass away. A carefully crafted estate plan can help achieve that goal, and attorneys in the area can help interested readers accomplish their estate planning needs. However, in some cases an individual may find that his estate has grown to a significant sum. When an individual passes away with many assets his estate may be subject to significant taxes.
One way that a person can shrink his estate in order to reduce his estate tax burdens after his death is to provide his loved ones with financial gifts. Under the current law, individuals may give their kids, grandkids, and other relations up to $14,000 every year without being subjected to a different tax, the gift tax.
Certain types of financial gifts, such as those for educational expenses and medical bills, do not count toward the $14,000 limit when they are paid to the institutions that have assessed the charges. Additionally, spouses can give each other unlimited gifts that are not subject to the annual gift limit.
To provide an example, a person could reduce his taxable estate by more than $100,000 if he chose to give each of his three children, their spouses, and his four grandchildren the maximum allowable gift. With careful planning and gift giving, a person can preserve enough of his estate to provide loved ones with inheritances but avoid the costly taxes that often burden large estates.
There are a variety of other ways that a person may work with his estate plan to reduce estate tax liabilities. To learn more, readers are encouraged to reach out to their estate planning attorneys.
Source: fool.com, “Estate Planning in 2017: Here’s What You Need to Know,” Dan Caplinger, Jan. 22, 2017