Avoid Estate Tax in 2009, 2010
Monday, September 28th, 2009 | Places
Estate Tax is also commonly known as inheritance tax or as the death tax. Many argue the point of this tax as we have already paid tax on what we have earned and now we have to pay it again when we die.
Gifts
The most common and easiest way to avoid paying some of the estate tax is by reaching your annual exclusion amount in giving away your money and assets as gifts. This will only work if you plan carefully. You do not want to give away too much. This could result in a problem if you should have an emergency and do not have enough left to pay for it.
Living Trust
A living trust can help in planning if you and your spouses total assets are worth more than twice the federal limit of $1,000,000.00. This can be easy to set up but may require the help of an attorney to complete the paperwork.
Charitable Donation
You will not be required to pay estate tax on any cash or property that is given after your death to any qualifying charitable program. The IRS provides a publication with a complete list of charitable program examples.
All of these tools can help lower the amount of tax that is owed but more than likely you will be required to pay out some taxes even after you have passed away. The best way to avoid estate tax is to plan ahead and know where your money is and where it is going.