Last Updated on December 20, 2024
- Manage assets before death: Give away some of your assets to potential beneficiaries before death. Each year, you can gift a certain amount (currently $16,000 per person) to each person tax-free.
- Marital transfers: If your spouse is a U.S. citizen, you can give them a tax-free lifetime gift of any amount. However, this tax exemption only delays the estate tax bill, as it will be owed when the surviving spouse dies.
- Gifts to family members: Utilize the annual gift tax limit (currently $16,000 per person) to give away assets to family members, reducing the value of your estate.
- Charitable donations: Make tax-deductible charitable contributions, reducing the value of your estate and potentially avoiding estate taxes.
- Irrevocable trusts: Consider placing assets in an irrevocable trust, such as a grantor retained annuity trust (GRAT), to shield them from estate taxes.
- Family limited partnerships: Establish a family limited partnership (FLP) or limited liability company (LLC) to hold business interests and minimize income tax, ensure continuity of ownership, and limit liability for family partners.
- A-B trusts: Set up an A-B trust, a type of joint trust, to distribute assets to beneficiaries while minimizing estate taxes.
- Strategic gifting: Consider gifting assets to beneficiaries, contributing to 529s and other educational accounts, and making charitable contributions to reduce the value of your estate.