How to Minimize Taxes with Estate Planning

Seek Assistance from a Maryland and Washington DC Estate Planning Lawyer

Photo of minimizing estate taxesEstate and inheritance taxes can hit families hard; the top federal estate tax is currently set at 40 percent. In addition, Washington DC has a state estate tax, and Maryland has both a state estate and inheritance tax. If you are preparing to leave your valuable estate to your loved ones, you may worry there is no way to escape these taxes, and that your beneficiaries will lose out on much of the inheritance you set aside for them. However, solutions do exist. Estate planning lawyer Michelle Lanchester can find ways to minimize your tax burden with thorough estate planning, possibly including advance directives, durable power of attorney, guardianships, a letter of instruction, revocable living trusts or other types of trusts and wills.

Minimizing Estate Taxes Using Estate Planning Techniques

The exemptions for estate taxes, or how much money you can pass on before estate taxes kick in, varies greatly from year to year. Here are some methods you can use to minimize your estate-related taxes:

  • Gifting – This is the easiest method to minimize some of the potential tax burdens and provide immediate support to your beneficiaries. In 2014, you can gift any individual up to $14,000 a year before the gift tax comes into effect, along with a lifetime gift allowance equal to the estate tax exemption, without incurring taxes. You can also pay medical bills or college tuition directly without contributing to your annual exclusion for the gift tax.
  • Using Trusts – Life insurance trusts allow you to retain death benefits of your life insurance policy outside of your estate, which means these benefits do not count toward your estate tax liability. Other trusts, such as irrevocable gift trusts and spousal lifetime access trusts, can allow you to maximize your estate and minimize your tax liability.
  • Beneficiary Designations – Annuities, IRAs, retirement plans and similar funds allow you to name a beneficiary, which typically allows the individual to inherit outside of the taxable probate estate.

These three methods are but a scratch on the surface of what estate planning attorneys can accomplish to maximize your estate and the amounts you may pass to your family, friends and charities. Depending on your situation, there may be many different solutions to minimize your estate and inheritance tax, which is why it is important to speak with our Maryland and Washington DC estate planning attorney. She is qualified to craft a necessary estate plan and help you execute the necessary legal and financial documents to best suit your needs.

How to Get More Advice on Estate Planning for Tax Minimization

Planning your estate is an important process, and in order to get your loved ones the benefits they deserve, you should seek the right legal help. Contact Michelle Lanchester today. She provides a personal touch and can find the right solutions to your estate planning needs.

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