You worked hard your entire life to provide for yourself and your family, and the last thing you want is for the government to seize the fruits of your labor when you pass away. The Federal “Death Tax” can be as high as 40%, but with the right approach to estate planning, you can minimize your exposure to this onerous tax. Here are four strategies to consider – although it’s highly recommended to speak with an estate planning attorney before you implement any of it!

Transfer Your Wealth While You Are Alive

You can give gifts to your family without penalty, generally up to $14,000 per year. If a husband and wife give, it can be up to $28,000 per year, per recipient. Another option is giving to an educational or healthcare institution to provide for your family’s educational and health needs.

Transfer Assets to Your Spouse

If you are married, you can transfer your entire estate to your spouse and not have to pay estate taxes. However, when your spouse passes, they will have to pay estate taxes on their estate, including whatever amount your transferred to them. So this is only a temporary fix, as taxes will eventually have to be paid on the amount transferred. However, particularly if there is a significant age difference between the two of you, it can buy quite a bit of time.

Purchase an Irrevocable Life Insurance Trust

Many people buy life insurance but don’t realize that the proceeds of the insurance are included in the estate of the insured. In order to prevent this, experts recommend purchasing an Irrevocable Life Insurance Trust (ILIT). An ILIT is an effective way to ensure that proceeds from your life insurance policy will not be included in your taxable estate.

Give to Charity

An excellent option for those so inclined is to give a portion of your estate to charity. When done properly, charitable contributions can often significantly reduce your tax liability, so it’s worth a detailed discussion with your estate planning attorney. Charitable gifts can also be set up so that you are able to use your assets until the time of death.

If you are a high net worth individual, make sure your estate stays with your family and out of the hands of the government and the court system! Hire an experienced estate attorney that specializes in high net worth clients and find ways to protect your estate and your family. Please contact us today to learn more!