Tips for Creating a Comprehensive Tax Minimization Plan for Your Estate

« Back to Certified Tax Coach

Tax minimization strategies aren’t just for your wealth-building years. It is also critical to consider the taxes that could be assessed to your estate after your death. The cost of passing your wealth to beneficiaries can be shockingly high. Without careful planning, a lifetime of hard work and conscientious saving can be undone after your death. Estate tax regulations are fairly complex, so the earlier you engage an expert, the better your chances of protecting your legacy. Your Certified Tax Coach has the experience necessary to help you create an effective plan to keep estate taxes low.

Estate Tax Basics

You are probably already familiar with some of the fees that could be assessed to your estate. For example, if you pass away without a will or a revocable living trust, there are expenses associated with probate. However, the actual taxes on your wealth are an entirely separate class of expenses. Before a single asset is transferred to your beneficiaries, the value of your estate is assessed. Taxes are calculated based on that figure, and they must be paid in full within nine months of your death.

If you fail to plan ahead for the payment of estate taxes, your beneficiaries could be placed in a difficult position. There have been situations in which a beloved family home or thriving family business had to be sold, because the estate tax bill was higher than estate’s liquid assets. Fortunately, there are steps you can take now to prevent this sort of heartbreak.

Common Strategies for Keeping Estate Taxes Low

Minimizing estate taxes begins with a thorough review of your assets. A certain portion will be exempt under current regulations, though Congress makes regular adjustments to the exemption limit. Keep in mind that states may have separate estate tax laws that are not affected by Congressional action.

Once you have determined that estate taxes are likely to be assessed against part of your estate, the next step is to consider who your beneficiaries are going to be. While assets inherited by your spouse are not subject to estate taxes, your plan should account for the possibility that he or she pre-deceases you, or that you both pass away at the same time.

You and your spouse can combine your exemptions, so that you can take advantage of the option to pass assets to your spouse tax-free in addition to the full estate tax exemption. However, keep in mind that combining exemptions is only permitted if the surviving spouse does not remarry.

You also have the option of transferring a portion of your estate before your death. Many people choose to make gifts to their beneficiaries while they are still around to enjoy the results. Some cash gifts could be subject to taxation, but there are exemptions for gifts such as tuition payments. Your Certified Tax Coach can help you plan for transferring some of your wealth during your lifetime in a manner that keeps your tax liability low.

Finally, there are a variety of trusts that make it possible to access funds during your lifetime, while still protecting assets from estate taxes after you pass away. For more information on creating an estate plan that protects your beneficiaries from high tax bills, work with a Certified Tax Coach.

Have a question?

Call us!516-680-1261

Find Us


20 Orange Drive
Jericho, NY 11753

Free Newsletter!

Tax articles