If you live in New York and have worked hard to leave a legacy behind to your loved ones, you may have concerns about just how much tax the government will assess on your estate. Every dollar the government takes from your estate is one that cannot go directly to your loved ones, so learning how to minimize estate taxes is an important component of the estate planning process. At the law offices of Joseph A. Ledwidge, P.C., we understand the ins and outs of estate planning, and we have helped many clients who wished to preserve as much of their wealth as possible for their loved ones.
Per U.S. News and World Report, one of the most effective methods of preserving your wealth and reducing estate tax involves placing your assets in trusts. Trusts can come in several different forms, so you can do some exploring to find the right type or types to fit your needs. When you create a trust, you must appoint some as trustee, and it becomes this person’s duty to oversee the trust and make sure assets undergo proper distribution to beneficiaries.
Another way you can work to reduce estate tax involves simply giving some of your wealth away before you pass on. The lower the value of your estate, the less you can anticipate paying in taxes, so if you have loved ones you trust to use it responsibly, consider giving some of your wealth away now. Some people choose to do this in annual installments.
A third way you might be able to minimize how much your loved ones ultimately pay in estate taxes involves purchasing extra life insurance they can use to cover taxes once you pass on. If you choose to go this route, make sure you purchase the policy through an irrevocable life insurance trust to avoid adding to the estate itself, and thus, its tax burden. Find more about estate administration on our web page.