The more successful someone has been throughout their life, the bigger their final legacy may potentially become. Resources that they have saved and accumulated through professional success or investments could help support their loved ones or even charitable causes after they die.
Unfortunately, the personal representative of an Arizona estate has to settle obligations before they distribute any resources to the beneficiaries chosen by the testator. Debts and probate court costs require payment before a representative passes out inheritances to loved ones or makes contributions to nonprofit organizations.
Taxes also require payment from estate resources before asset distribution. Arizona does not, but the federal government does. Estates worth more than $13.61 million dollars could be at risk of taxes that substantially reduce the overall value of the estate.
How can people with large estates plan to reduce or avoid estate taxes?
There are a variety of tax planning strategies available
There is no one ideal strategy for reducing estate tasks. The overall size of the estate, the assets it includes and someone’s legacy wishes all influence the most effective tax minimization strategy for an estate plan. Typically, the goal is to reduce the overall value of the assets held in the name of an individual to minimize the value of their estate.
Someone hoping to leave money for a charitable cost may want to start a trust to keep the assets that fund the trust from contributing to the overall value of their estate. Those who own businesses might also use trusts to help ensure the continued successful operations of their companies and keep them out of their estates.
Others might bequeath assets to their spouse to avoid estate taxes or add beneficiaries as co-owners to those assets while they are still alive. Other times, people start making gifts and donations before they die. Typically, estate tax planning entails finding ways to diminish what resources become part of someone’s estate before they die, and a variety of tools can help achieve that goal.
Testators who think carefully about their hopes and their personal resources can create estate plans that help them minimize tax obligations after they die. Exploring different tax strategies can help someone arrive at the best possible plan given their current circumstances.
