Estate Tax Savings Strategies

Make Sure You Plan for Two Different Types of Taxes

When it comes to estate planning, a big consideration is tax planning. Some do not realize that you should plan for two different types of taxes: estate and income taxes. For income tax strategies, go here and read how you can take advantage of new tax laws relating to taxation of retirement accounts. For ideas on estate tax savings, read on.


Do You Want Your Estate To Pay Over 40% In Estate Taxes?

Current law says that if your estate is valued over $2,000,000 then everything over that amount will be taxed at roughly 40%. Thatís a lot of money to pay to Uncle Sam instead of your family. Many families can get to this amount very quickly when they start adding up the value of their real estate, retirement accounts, investments, life insurance (yes the death benefit value of life insurance is counted as part of your estate), personal possessions, vehicles, etc. The question is, how will you pay this bill?


Double the Amount You Can Shelter From Estate Taxes

Many have heard of what is referred to as an A-B Trust. This is a way to double the amount you can shelter from federal estate taxes. Everyone is allowed to take a tax credit, but many married couples take only one instead of two. If you are married, you can pass everything to your spouse regardless of how much, without any estate tax. Sounds pretty good, right? Donít be fooled. When the second spouse dies then the estate gets a tax credit of the two million and everything over that is taxed. What happens there is that the married couple could have taken a tax credit when the first spouse died if they had properly set up a trust to allow for this. A properly structured trust will split the estate assets into two parts: A and B. This is why it is called an A-B trust. An easy way to remember is A=above ground, B=below ground (sorry to be a little morbid). By using this method we can potentially save hundreds of thousand of dollars that would go to your family instead of the tax man.


The Inheritance Multiplier Plan

Do you have savings set aside that you are not using that you will leave to your children? How would you like to double or triple the amount that you leave them? You can do this by utilizing what I call ďThe Inheritance Multiplier Plan.Ē This is a fancy name for using life insurance as a strategic tool. Life insurance you say? Yuck!! Well let me tell you that life insurance is a valuable tool in the right situation in estate planning. Say you have a $100,000 that you were going to leave to the kids or grandkids as an inheritance. By depositing the $100,000 into a life insurance policy you may be able to double or triple it immediately! And thatís not all. The death benefit on life insurance is income tax free. That means your heirs do not worry about income taxes like they would on your retirement accounts. Check into these strategies right away and see if they apply to your situation.


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