1. Money
Julie Garber

Quick Estate Planning Tips - How to Avoid Estate Taxes

By February 27, 2009

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When it comes to estate taxes, there are really only five ways to reduce your estate tax bill:

  1. Spend your money
  2. - But the problem with this approach is that no one really knows how much money they'll need to take care of themselves for the rest of their lives.

  3. Gift your property directly family, friends, and/or charity
  4. - But this approach has the same problem as #1 - how much money will you really need to take care of yourself for the rest of your life?

  5. Use basic estate planning techniques
  6. - This includes setting up AB Trusts if you're married and using an Irrevocable Life Insurance Trust to hold and own life insurance that can be used to pay the estate tax bill.

  7. Use advanced estate planning techniques
  8. - This ranges from setting up a Family Limited Liability Company or Partnership that can be used as a vehicle to gift assets to your loved ones, to establishing domestic or offshore asset protection trusts, to charitable planning through the use of Charitable Remainder Trusts or Charitable Lead Trusts.

  9. Move to a new state
  10. - If you live a state that collects an estate tax and/or an inheritance tax, then consider moving to a state that doesn't. Of course, the risk is that the state that you choose could decide to implement an estate and/or inheritance tax after you move, but take Florida for example. In order for there to be a tax on the estates of Floridians, the state constitution would need to be amended, and that won't be happening any time soon.

The key is to strike a balance between your desire to avoid taxes with your fear of losing control of your property.

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