How to Minimize Estate Taxes

No one likes to talk about estate planning, but taking the time to prepare now will make things much easier for everyone concerned later. The most important reason to plan your estate is to preserve the assets you've worked your whole life to acquire. Taking steps to minimize estate taxes will preserve those assets and allow you to pass them onto your loved ones instead of the government.

Instructions

1. Select beneficiaries for your money accounts. Naming beneficiaries will save the accounts from going through probate, making the process simpler and saving attorney fees. In most cases, if your spouse is the beneficiary, he or she could qualify for the marital deduction for estate taxes.

2. Transfer assets to a irrevocable trust. Assets in these types of trust are generally free from estate taxes.

3. Start giving your money away while you're still living. The federal government allows you to give up to a certain amount each year to any individual, tax free.

4. Give monetary gifts to children or grandchildren over the age of 14 to minimize future estate taxes and current capital gains taxes. Dividends and capital gains are taxed at a much lower rate for children than adults.

Tips & Warnings

• Before meeting with an attorney for estate planning, prepare a list of assets and their values, insurance policies, vehicle title information and other documents.

• If you plan to move assets from tax deferred accounts into trusts, do so before the age of 70, when required minimum distributions kick in.