When you start shopping for a home loan, it might be easy to assume that all lenders are the same. After all, they all have mortgage brokers, paperwork, and impressive offices. However, when you really start exploring the details, you might discover that lenders all have something different to offer. On my blog, you will learn more about financial terminology, so that you can determine what you are getting into when you sign the terms of an agreement. This information is presented in an easy to understand, friendly way, so that you aren't bombarded by terminology and industry jargon that you don't understand.
When you pass away, your property will be passed on to beneficiaries who are named in your will. When this happens, a portion of your assets will end up in the hands of the US government in the form of estate taxes. You could avoid paying estate taxes by spending all of your money, but this might be difficult to do without risking running out. If you wish to pay as little as possible in taxes, however, there are other actions you can take.
Don't Assume You're Not Wealthy Enough
Even if you're middle-class, you may still be forced to pay estate taxes if you live in a state that adds additional taxes to an estate. One issue you might also run into is the value of your business. Your business might be worth more than you expect and this may lead to your estate being large enough that it might be subjected to taxes. Otherwise, you might need to use advanced estate planning tactics.
Create a Charitable Trust
There are several ways in which a charitable trust can allow you to reduce your taxes. First, you will be able to deduct the charitable trust from your income taxes. Second, you will be able to reduce the estate taxes that will have to be paid.
Qualified Personal Residence Trusts
If you live in your residence for a number of years and place your home in a qualified personal residence trust, you will then be able to pass your home onto your heirs at a reduced value and this can reduce the number of taxes you will need to pay.
Irrevocable Life Insurance Trust
If you transfer a small amount of your estate that is equal to a life insurance premium, you will be able to reduce the size of your taxable estate.
Why Trusts Are Often the Answer
There are several other types of trusts that an estate planning advisor might encourage. You might be reluctant to place your money in a trust because you will be placing your money in the hands of someone else. However, this other person can be a family member, depending on the type of trust.
Each trust can have an upside and a downside. For example, if you have a spouse and you create a credit shelter trust, your spouse will have access to the trust after you pass away. However, the trust will be excluded from your spouse's estate. Reach out to an estate planning professional for more information.Share