A little planning may save you some taxes!

You can’t take it with you, but failing to plan for your estate can mean that the government, rather than your heirs, may get the major portion of your hard-earned money. Why? Because estates that exceed the exclusion amount allowed by the government are taxed.

You may be surprised what your estate is worth. Add up the value of all your assets. Don’t forget life insurance which may fall into your estate. If your total value exceeds the exclusion allowed by the government, you should look into what a few simple planning techniques can save your family at estate time.

In addition, there are some very effective estate planning ideas that can also cut your current income tax bill.

Some planning possibilities:

The current tax law allows you to give away a certain amount of money per year per recipient. Your spouse may join in the gift even if he or she is not an owner in the transferred asset. This means that you could double the amount of your transfer per year to each of your heirs. The person receiving the gift does not need to be related to you. These annual gifts do not reduce your once-in-a-lifetime exclusion.

If you have property which is not needed for your retirement, maybe it is a candidate for transferring during your lifetime. If it is a large income-producer, the future income will be taxed to the new owner and not to you, plus the property will be out of your estate.

You can make unlimited transfers to your spouse either during your lifetime or through your estate. There are no taxes on spousal transfers, regardless of size. But leaving everything to your spouse may not be a good idea, since doing so fails to utilize the lifetime exclusion amount in the estate of the first spouse to die. Planning will allow you to use the exclusion in both estates, and you’ll be able to transfer twice as much to your heirs free of estate tax.

With proper planning, certain life insurance proceeds can be kept out of your estate.

Check with your advisor for the specific tax rules that may apply to you.

If you are in doubt as to whether or not we can assist with a particular problem, just give us a quick call. We do not charge for such calls. If we can’t help you, perhaps we can direct you to someone who can.