Tax Tactics in Estate Planning

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Tax Tactics in Estate Planning

Posted by Christopher Martens | Sep 11, 2018 | 0 Comments

Planning for Taxes

The federal estate tax can hit high net-worth estates with a hefty tax burden that affects the surviving family members. Most people want to leave all their assets to their heirs, not the federal government. The lifetime exclusion amount for gifts and estates is just under $11.2 million, so estates valued under this threshold will not be subject to the estate tax. However, you can use smart estate planning techniques to strategically reduce your tax burden or avoid paying the estate tax altogether. Reading through these quick tax tactics in estate planning will give you an idea of the measures you can take to do so.

Transfer Assets to Your Spouse

This perhaps the most common tax tactic in estate planning used to reduce your taxable estate. Bequests to your spouse at death—as well as lifetime gifts—are not subject to the federal estate tax. Bear in mind, however, that the taxable estate will be subject to the estate tax upon the spouse's death. Transferring assets to your spouse essentially defers the estate tax so he or she does not bear the burden.

Gifts to Children and Grandchildren

As of 2018, you may gift up to $15,000 annually to children and grandchildren, per recipient, without paying the gift tax. If you and your spouse take advantage of this tax exclusion over a number of years, you can effectively reduce your estate's value.


Trust are useful vehicles to transfer funds to reduce your taxable estate. There are a variety of trusts you can establish to house assets, thereby protecting them from being subject to the estate tax.

Buy Life Insurance

Life insurance proceeds generally aren't subject to tax. But to ensure they won't be included in your taxable estate, set up an irrevocable life insurance trust, which would shield the proceeds from the estate tax as long as you set up the trust at least three years before your death.

Charitable Transfers

Charitable transfers can reduce your taxable estate, and lifetime gifts also have the added benefit of being income tax deductions. Set up a charitable trust that will be transferred to a tax-exempt charity upon your death. You can also elect to include assets, such as stocks, to avoid capital gains taxes.

Create a Family Limited Partnership

This estate planning move takes a little more work than other methods but is an effective way to pass your assets to your heirs without the IRS taking a share. This can be used if you have family-owned businesses or properties, which many wealthy families have. If you make heirs and other family members limited partners, they will own a portion of the assets, but you still retain executive decision-making power.

Speak with an experienced California estate planning attorney if you need help creating an estate plan that will protect your assets and reduce your taxes. The estate tax can be avoided by using a number of the above tactics, and there are numerous other forms of trusts that can be used to further reduce your taxable estate. Even if your estate won't be subject to the estate tax, an estate planning attorney can potentially leverage certain estate planning tools to potentially reduce your taxes during your life.

Do you want to minimize your tax burden? Fresno area estate planning attorney Christopher Martens can help you carefully plan your estate to preserve wealth and protect your loved ones' interests. Attorney Christopher Martens has the skills and knowledge needed to help you ensure your wishes are carried out properly. Serving the Visalia and Fresno areas, The Law Offices of Christopher Martens can provide strategic estate planning guidance. Call our office at 559-967-7386 or email us at [email protected] for a free consultation.

About the Author

Christopher Martens

Bio Visalia and Bakersfield criminal defense attorney who has dedicated his life to helping those who have been accused of crimes or injured due to the negligence of others.


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