Lowering Estate Tax Methods and Tactics

When going through the process of estate planning, many individuals are concerned with reducing estate tax and trying to maintain a low estate tax so that their family will receive the maximum benefit from their assets.   There are many considerations when creating an estate plan and there is potential for great tax savings.

Life Insurance Policies

An estate value is calculated by totalling all assets, including the value of life insurance policies.  For individuals with large policies, creating a life insurance trust is a way to save significant amount of money on estate taxes.   By adjusting estate tax, lowering inheritance tax is implicit for the beneficiaries.

Defining Life Insurance Trust

A life insurance trust works by diverting the value of a life insurance policy to a trust account that does not become part of the value of the estate of the deceased.  Once the estate holder creates the life insurance trust, he looses all rights to the account and the account is said to be irrevocable.  That is, once it’s created, it is no longer under the control of the testator and therefore no longer a part of the estate.

Life Insurance Trust Tax

With a life insurance trust in place, the value of the insurance policy will not be included in the value of the estate, so the estate taxes will be dramatically less than if the policy value was included.  Using this method is an effective way of maintaining a low estate tax rate.

Estate Taxation Legal Help

To create an estate plan that serves the interests of your family and lowering estate tax, you should contact an estate tax attorney who regularly handles matters related to wills, trusts and estates.  Seeking professional advice now can mean dramatic savings for your family after you are gone.