Is There Any Way To Avoid Estate Taxes?
To paraphrase a popular quote from Benjamin Franklin, the only things certain in this world are death and taxes ― but not often with the federal estate tax.
For instance, smaller estates are typically not subject to any federal estate taxes. In fact, as per the new tax laws that went into place on January 1, 2018, the estate tax exemption is $11.2 million ― meaning a person can leave his or her heirs up to $11.2 million and pay no estate taxes at all. But, if the estate is larger than $11.2 million for an individual or $22.4 million for a married couple, the excess may be subject to a 40% tax.
Given how estate taxes can eviscerate a large estate, you may wonder if there is any way to avoid paying these taxes. The answer is yes, there is.
Trusts: The Answer To Your Estate Tax Problems
While there are many estate planning tools out there, one of the most effective tools for reducing ― or completely eliminating ― estate taxes is a trust. Essentially, you can use certain trusts to remove assets from your estate, thereby lowering the value of your estate in order to avoid estate taxes.
It is important to remember, however, that not just any trust will get the job done. For example, the trust must be irrevocable, meaning you will not own the assets once they are placed in the trust. But, this does not mean you cannot benefit from the trust in many ways.
If you would like to learn more about trusts and other methods for eliminating estate taxes, contact the experienced attorneys at The Hughes Law Firm today. We will carefully examine your situation and help determine which legal options are best suited to meet your needs and goals.