Those in the Torrance area with significant wealth may have been very strategic in the investment and growth of their wealth. However, despite their careful planning, if they are nearing the tax-exemption limit, they may owe estate taxes upon their death. The current estate tax exemption is capped at $11.7 million for single adults and $23.4 million for married couples. The following are two estate planning tips that can help those of significant wealth avoid the estate tax.
Utilize the gift exclusion
Under current law, a person can give another person up to $15,000 a year during their lifetime, which can reduce the size of their taxable estate. These gifts can go to a person or they can be put in a trust. A person can give multiple people gifts in one year, so if they do so over the course of several years it is easy to see how gifting can reduce the size of their estate, allowing them to avoid estate taxes.
Make charitable donations
If you have a favorite cause or an alma matter you may want to give a charitable donation. Even appreciated assets, such as shares in a company, can be donated to charity if they are transferred directly from the estate to the charity. These donations come with a bonus — they avoid the capital gains tax because they are being donated, not sold. While you can make a direct cash donation to a charity, you can also utilize qualified charitable distributions, a donor-advised fund or a charitable split-interest trust to donate to a favorite charity and reduce the size of their taxable estate.
Learn more about estate planning
Those of significant wealth have strategies that can help reduce the size of their taxable estate. Ultimately this post is for educational purposes only and does not contain legal advice. Those who want to learn more about estate planning are encouraged to explore our firm’s website for further information.
