You may already have a plan on how to minimize or handle the taxes on your estate after your death. But have you considered the taxes your heirs may have to pay?
Remember that the government will tax everything possible, so your heirs may be looking at taxes on their inheritances. However, you may be able to minimize it.
Use better tools
While a will serves a purpose in an estate plan, you need to diversify the way you leave assets to heirs. Consider using tools that will help reduce tax liability, such as transfer-on-death or trusts. Make sure you understand the rules for different tools and how they can impact taxation.
Gift items now
If you give assets to your heirs prior to your death, you can save them a lot of money on taxes. Depending on the gift, you can often give it tax-free or with very limited liability during your lifetime. Just make sure to find out the exact rules applicable to your situation since they can vary based on the different circumstances.
Adjust your accounts
Retirement accounts often have the biggest taxation hits for heirs. If possible, make adjustments now to help reduce that liability. Avoid traditional IRAs. Instead, roll your money into a Roth account, which is more tax-friendly.
Saving your heirs from taxation is a good idea. After all, you want your loved ones to receive the benefits of the assets that you have labored to attain during your life and not the government.
