If you are fortunate enough to be able to leave a large estate to your heirs after you pass away, then it's important you pre-plan to reduce their tax liability and preserve as much of your assets as possible. To do so, follow each of these estate planning tips:
Tip: Partner Up with a Skilled Estate Planning Attorney
Since the laws surrounding the disbursement of estates are many and have some odd quirks, it's absolutely vital you partner with an estate planning attorney, like those represented at http://valentineandvalentine.com. The lawyer can advise you of the best ways to hold your assets and strategies you can use to reduce your heir's tax liabilities. In addition, by moving your assets into trusts and other legal vehicles, you can make the transfer of your assets a lot faster and easier for your heirs.
Tip: Move Your Life Insurance Policies Into a Specialized Trust
If you hold large life insurance policies for yourself and/or your spouse, then you should move them into a special trust known as an irrevocable life insurance trust. This type of trust holds your life insurance policy until your death.
After you pass away, the trust distributes your life insurance proceeds to the designated beneficiaries outside of the rest of your estate. This saves your heirs from having to pay taxes on the disbursement, and it also lowers the total amount of your estate by the amount of the policy's eventual payout.
Tip: Start Giving Yearly Gifts to Friends, Relatives, and/or Charitable Organizations
Since your estate is very large and you won't need all of it to pay for your end-of-life care, you can start distributing parts of it to friends, relatives, and charitable organizations well before your death if you so choose.
The IRS allows you to gift $15,000 each year to individuals without you or the recipient having to pay taxes on the gift. Additionally, if you want to make a gift to a married couple, you can gift each of them $15,000 for a total of $30,000 tax-free.
Finally, you also have the option of giving to charity while you are still living or your estate planning attorney can set up a specialized charitable remainder trust (CRT) for this purpose.
A CRT is an irrevocable trust where you can put interest-generating assets to hold them until your passing. When the time comes, all of the interest plus the principal balance of the accounts will be donated to the charities you designated when your estate planning attorney initially set up the trust.
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