Nobody wants to pay more in taxes than they are legally required to.
So, it makes sense for retirees and others who are planning for the dispensation of their estate to take advantage of every available tool to reduce their tax burden, so that family, friends, and organizations are able to benefit maximally from a lifetime of your hard work.
Gifting is one of the simplest, yet most effective ways of doing so.
Estate planning IS tax planning.
We usually don’t think of estate planning in that way, but it is true: without an estate plan which includes a clear last will and testament, the government will maximize their claim on the assets of a deceased’s estate.
So an estate plan is really a way of checking the government’s power over the assets you’ve accumulated over the course of your life.
Tax rules, Abbreviated.
While the tax code is a labyrinthine tangle of rules and regulations, there are three elements, easy to understand, which must guide any and all estate planning activities:
Gifting as a core estate planning strategy.
(From here on out, our presumption is that you have assets you would like to pass along, and want the government to get as little of them as possible.)
The most powerful reason for gifting is: When assets are gifted, the value of the estate is reduced by that amount. In essence, you are taking assets and passing them along to your beneficiaries, tax-free. At the same time, you are reducing the value of your estate, and thus subjecting it to a lower tax rate.
Considerations:
A Certified Financial Planner™ or CPA can help investors with any size estate to plan for a seamless, hassle-free dispensation of an estate’s assets, both as gifts as well as an inheritance.