Individuals who have a sizeable estate must consider the tax liabilities that their loved ones might face when they pass away. Estate taxes aren’t something that most people will have to deal with, but those who do have multi-million dollar estates should find out how they can downsize the estate so they can help to prevent a high tax bill for their heirs.
There are several ways that you can try to cut down on the amount of taxes that your loved ones will pay on your estate. One way is that you can hand out gifts to individuals and entities. This enables you to give them assets now instead of them having to wait until you pass away. Each gift reduces the value of your estate, but you have to make sure that you aren’t subjecting the person to a gift tax.
When does a person have to pay a gift tax?
An individual can give up to $15,000 to a person or an entity per year before it is subjected to the gift tax. If you’re married, you can give a person $15,000 and your spouse can give that same person $15,000 in one year and those gifts will still be exempt from the gift tax.
The Tax Cuts and Jobs Act sets the threshold for estate taxes at $11.7 million per individual or $23.4 million for couples. Estates over this amount will be subjected to the estate tax.
When you have a large estate, proper planning takes time
If you have a large estate, it’s wise to do what you can to make sure that the maximum amount of your assets goes to your heirs — not the government. Working with an experienced advocate can help make sure that happens.