When you have a lot of assets, you have the potential to lose some of what you have worked to amass to estate taxes if their value exceeds a certain level. There are, however, certain things Missouri residents can do to reduce the amount of their estate that their beneficiaries will lose to estate taxes.
So, what are some steps you can take now to help minimize how much of your wealth your loved ones will lose to estate taxes?
Start establishing trusts
One measure many high-asset individuals take to help reduce what their loved ones will lose to estate taxes involves placing certain assets into trusts. Just how can this reduce your estate tax burden? Once you place your assets into trusts, those assets formally become the property of your trust, rather than you. Therefore, the value of the assets you include inside no longer counts toward your estate, meaning you do not have to pay taxes on them, thereby preserving more of your wealth for future generations.
Start giving away money and assets now
Another way you can begin to reduce the amount of tax the federal government will assess against your estate involves giving away some of your wealth now, while you are still living. If you have, for example, adult children you trust to use your money wisely, you may want to start giving them some of your assets, whether through monthly or annual installments, or a similar method. In doing so, you are effectively reducing the overall value of your estate, and, as a result, reducing the amount of tax assessed against it.
Some people in your shoes tend to avoid worrying about estate taxes, figuring that they will no longer be around when they come to fruition. However, those that prioritize maximizing the amount of what they leave behind for their loved ones may find these two methods of reducing estate tax extremely beneficial.