4: Minimizing Your Tax Liabilities

Practically everything you own or have control over can be subject to some form of tax when you try to pass it through your estate; federal estate, gift and generation-skipping taxes, plus state inheritance tax, can all take their toll.

Not all of us will be subject to federal tax; if the value of your estate is under approximately $1 million at your death, it will not be taxed. But for estates valued over that amount, creative estate planning can avoid or minimize tax liabilities.

Some things you may want to consider:

• Some strategies may call for you to relinquish control of certain assets during your lifetime.
• If the value of some of your assets decreases, tax savings realized by your estate tomorrow may not justify the expense of elaborate planning today.
• Many changes in federal estate tax law were enacted in 2001; if your current estate plan precedes that date it may be time for another review.
• Similarly, estate tax rules may well change again in the vagaries of Washington politics. Keep your plan up-to-date.
• Creative planned gifts can be among the least-complicated, least-costly tools to minimize estate taxes.

Next: The Basic Planning Tools

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