24 August 2018
Ways to minimize Estate Taxes for high Net Worth Households
Having a high net-worth comes with many pleasures but also many responsibilities. One of those responsibilities is estate planning to optimize your living situation for you and your family during your life as well as after your gone. Optimal estate planning can have a profound positive effect on the amount of taxes that you may incur. It is important to have the right approach to this issue and not leave important details to your heirs. When an optimal estate plan is not put into action often very few solutions are left available after you become incapacitated or pass away. Additionally, the amount of taxes and legal fees a passive attitude towards estate planning create can sometimes become exorbitant. There are ways to minimize estate taxes for high net worth households through use of estate planning techniques available in Connecticut; but to optimally plan your estate you must consult Waterbury estate planning attorney.
How Do You Know if Your Estate Will Be Taxed?
One thing many individuals don’t realize is that if they are a business owner, that will become included in their estate and increase their taxes. Other things included with in the calculation of your taxable estate are your property, both personal property and real estate; what you have in your bank accounts; any investments you have, including retirement accounts; and your life insurance. These items are all added up to determine the size and value of your estate. Consulting with a Connecticut estate planning attorney is the only way to be certain of all the legal avenues available to you to minimize your estate tax.
Should You Relinquish Wealth?
While this may sound odd, many Connecticut estate planning attorneys advise that those who have a high net-worth can minimize or avoid estate taxes by reducing the value of their estate. They can accomplish this goal annually by giving away gifts to grandchildren, children, or anyone else they would like. Those with a high net-worth are allowed to “gift” up to $14,000 yearly without repercussions. For those who would rather not give money to family or friends, making charitable donations is another way of reducing net-worth and it is also tax-deductible. Also, many times larger sums may be contributed to certain types of irrevocable trusts with tax advantaged outcomes.
Final Thoughts
It may not be entirely possible to avoid estate taxes. Therefore, purchasing additional life insurance may be a good idea to help cover these additional costs. This is especially helpful when a large portion of your net worth is held in illiquid assets like real estate or interests in a business. By doing this, you are helping family members pay the estate taxes without forcing certain assets to be liquidated. A Connecticut estate planning attorney will ensure these matters are addressed appropriately. Working with an attorney who has a practice focusing on estate planning not only offers you peace of mind, but it also ensures your final wishes are carried out by your family.