{"id":682,"date":"2020-01-28T17:31:24","date_gmt":"2020-01-28T17:31:24","guid":{"rendered":"http:\/\/www.southardfinancial.com\/?p=682"},"modified":"2020-01-28T17:50:42","modified_gmt":"2020-01-28T17:50:42","slug":"charitable-giving-3-of-the-best-ways-to-reduce-your-estate-taxes","status":"publish","type":"post","link":"https:\/\/www.southardfinancial.com\/charitable-giving-3-of-the-best-ways-to-reduce-your-estate-taxes\/","title":{"rendered":"Charitable Giving: 3 Of The Best Ways To Reduce Your Estate Taxes"},"content":{"rendered":"\n

We recently posted an article about Estate Taxes<\/a> and how the value of your company affects how much your heirs may have to pay. We pointed out the benefit of having your business properly valued so your heirs know exactly what to expect regarding the value of your estate. We also briefly touched on the idea of transferring portions of your company ownership during your lifetime<\/em> in order to lessen future tax burdens.<\/p>\n\n\n\n\n\n\n\n

In this post, we\u2019d like to help you discover a few more things you can do now to lessen this future tax burden. And while it can often be uncomfortable to plan ahead for what happens after you\u2019re gone, leaving your loved ones with a secure future and well-defined peace of mind is still one of the best gifts you can give.<\/p>\n\n\n\n

  1. Use All of Your Exemptions

    <\/strong>As of 2020, if you are married, you and your spouse (if they are a U.S. citizen) can both claim up to $11.58 million to be exempt from Federal Estate Taxes. That means over $23 million could be shielded! (Consult     current tax laws<\/a> or your tax professional for the most up-to-date advice.<\/em>)

    When one spouse passes, the surviving spouse does not have to pay any taxes on inherited assets. However, when that<\/em> spouse eventually passes away, remaining heirs will<\/em> be responsible for paying applicable estate taxes.

    In order to avoid this, each spouse could split their estate and put up to $11.58 million into separate living trusts. When Spouse 1 dies, their trust uses their $11 million exemption, and Spouse 2\u2019s trust is unaffected. The second trust comes into play only when Spouse 2 dies. Meanwhile, Spouse 2 still has access to all of the assets in the first trust.

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  2. Reduce The Size of Your Estate

    <\/strong>Smaller estate = smaller tax bill. It sounds obvious, but if someone eventually has to pay taxes, it\u2019s better for them if<\/em> you reduce your estate now. In addition to     what we covered in the last article<\/a>, here are a few more ways to do just that:

    (Note: Southard Financial is a valuation firm. We are not financial planners, accountants, or tax lawyers. Consult yours for the best advice. However, these are things we have seen many of our clients benefit from, and we just thought we\u2019d share them with you.)<\/em>

    1. Spend some and enjoy it!<\/strong> You\u2019ve worked hard, and you have every right to enjoy what you\u2019ve earned. Buy things. See the world. Be sure to set plenty aside for the necessities of life, though. As long as you aren\u2019t being irresponsible, this is a great way to reduce future taxes.

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    2. Give tax-free gifts. <\/strong>Currently, you can give an individual up to $15,000 ($30,000 if married) per year without any tax implications. So you and your spouse could give your three children and seven grandchildren $30,000 each and shrink your estate by $300,000 this year. This is a great way to be able to watch someone enjoy part of their inheritance while you\u2019re still around to enjoy it with them!

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    3. Give to charities.<\/strong> Donations to charities can provide significant tax deductions on income while allowing you to give away significant assets that can later be used by the charitable organization…making this an ideal way to reduce the overall value of your estate while doing some good in the world. There are several ways of doing this: