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Monday, December 17, 2007

Four Strategies to Help You Reduce Federal Estate and Gift Taxes


Federal transfer taxes can dramatically reduce the value of your hard-earned assets — and the value of your beneficiaries’ inheritance. When you add potential state inheritance taxes and other administrative expenses, your legacy shrinks further.
Even if the numbers do not appear large now, when you look to the future and calculate your estate growing at a conservative rate, the liability can be substantial.You can control your estate and effectively maximize your legacy with active planning and smart choices. Here are four strategies that may help to reduce the potential federal transfer tax obligations, allowing you to pass along more of what you’ve earned to your beneficiaries.

  1. Annual GivingMake annual gifts up to $12,000 ($24,000 if your spouse consents) to each of your children, grandchildren or their heirs.
  2. Family Limited PartnershipReduce the value of your assets and leverage your gifting dollars by transferring some of your assets to a Family Limited Partnership and gift portions of your limited partnership interest to your heirs at a discount.
  3. Special TrustsUse special trusts for making deferred gifts of assets such as a Personal Residence Trust or Grantor Retained Annuity.
  4. Generation-Skipping Transfer TrustProtect $1,110,0002 from federal estate taxes for your children and grandchildren ($2,220,0002 with your spouse’s consent) by setting up a Generation-Skipping Transfer Trust.


To learn more about any of these four approaches and how they might fit into your overall financial strategy, contact your Legal Financial Professional for more detail. This article is not a substitute for legal advice.

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