If you have significant personal property, there could be a risk of estate taxes decreasing what you leave for the people you love. If you don’t plan ahead before you die, as much as 40% of your property could go just to federal estate taxes.
Those with multimillion-dollar estates need to employ careful planning if they want to minimize how much of their property goes to the government instead of to their loved ones. Changing the way that you hold ownership of your property and moving certain assets into a trust can be a beneficial strategy.
Some people will also find that making strategic gifts for multiple years can be a useful way to diminish the taxable value of their estate.
Gifts are an important part of estate tax planning
You can gift your loved ones part of their inheritance while you are still alive. The IRS allows you to make significant gifts to your loved ones without them incurring tax liability. Every year, they typically increase how much you can give. In 2022, each of your family members can receive up to $16,000 in gifts without claiming those gifts for tax purposes.
Spread out across multiple family members and over several decades, those gifts could potentially push the total value of your estate below the estate tax threshold. Diminishing the overall value of your estate is an important step if you don’t want Uncle Sam to lay claim to the assets you would like your loved ones to inherit. Thinking about the goals for your legacy can help you craft an estate plan that will bring those plans to fruition.