Tips for minimizing your estate tax bill

On Behalf of | Jun 7, 2021 | Estate Planning

Although the state of Florida does not impose an inheritance tax, there is a chance that the federal government may impose an estate tax after your death. However, there are steps that you might be able to take to minimize the possibility that your estate will be subject to such a levy.

Place assets in a trust

Perhaps the easiest way to avoid estate tax is to put assets in a trust. This is because any items that are held in one are considered to be outside of your estate. In most cases, a revocable living trust will be enough to meet your needs. However, an estate planning attorney may suggest using an irrevocable trust if you want greater protection for items that are earmarked for a child, sibling or charitable foundation. Generally speaking, property in an irrevocable trust cannot be seized by creditors or ceded to a former spouse in a divorce settlement.

Gift assets during your lifetime

Making gifts while you’re alive can be an effective way to reduce the value of estate while also reducing the odds of family infighting after you pass. It can also ensure that adult children, grandchildren or others receive their inheritance in a timely manner. Federal law allows you to make gifts of up to $15,000 to an unlimited number of people each year without triggering a taxable event.

If you are looking for ways to reduce your estate’s tax liability, it may be a good idea to consult with an attorney. He or she may provide insight into creating a trust, making gifts or taking other steps to reduce the value of the items held in your name at the time of your passing.