Accumulating a considerable amount of wealth over a lifetime can seem like a great accomplishment. You may have done your best to work hard, save, invest and take other measures that would allow you to live a more than comfortable lifestyle and have funds left over to leave to your children and other heirs. However, you know that your wealth could face estate tax that may diminish what you have to leave your loved ones, and now you want to plan to avoid that tax as much as possible.
Fortunately, as you explore your estate planning options for distributing your wealth in general after your passing, you may find options for protecting your assets from taxation. In some cases, the options are simple, while others may need you to take a few extra steps. Nonetheless, you can create a plan that helps you preserve your assets.
What are your options?
The exact option or options that best suit your situation will depend on your personal circumstances. However, some options to explore include the following:
- Irrevocable Life Insurance Trust: An ILIT could allow you to have your life insurance policy transferred into an irrevocable trust after your passing rather than having it go directly to your estate, meaning that the payout would not face taxation.
- Gifting: You could gift some of your funds to your loved ones each year, which would remove the funds from your taxable estate.
- Making charitable donations: Giving to charity is another way to put your wealth to good use and not have it simply go toward paying taxes. Charitable donations can reduce your taxable estate and simultaneously help a good cause.
These few examples are not the only ones that could be available to you as you look to avoid estate taxes. You may have several other options open to you depending on your wishes and your overall estate. Discussing ways to protect your assets with an experienced Nevada estate planning attorney could allow you to gain valuable insight into your specific set of circumstances.
Why plan ahead?
Undoubtedly, hard work and planning allowed you to accumulate your wealth. Now, planning ahead can help you protect and retain that wealth so that it is used in ways you approve of. Whether those ways are helping charitable organizations or allowing your loved ones to be financially stable, estate planning could help you ensure your future visions are realized.