Advanced estate planning: Strategies to help reduce the taxable value of your estate

Learn the top strategies to help reduce the taxable value of your estate so you can leave more behind for the people and causes you care about.

You’ve spent your life building something you can one day pass on to people and causes you care about most. But federal and state taxes can affect the value of the legacy you hope to leave behind.

Working with your estate planning team, we will help you evaluate different strategies to ensure more of your assets go exactly where you intend.

Here are strategies that can potentially help you preserve your estate for your heirs, while mitigating the impact of taxes:

In this article:

Lifetime gifting

The rules around tax-free giving can benefit your loved ones and advance your financial goals, while you’re still alive. A few strategies to know:

  • Lifetime gifting: One of the most effective strategies for reducing your taxable estate is also the simplest: Giving money directly to individuals during your lifetime. For 2024, federal tax law allows individuals to gift up to $18,000 per year (and $36,000 for a couple) to an unlimited number of individuals, gift tax-free — without the gifts counting toward your total federal lifetime gift and estate tax exclusion of $13.61 million (currently).

  • 529 plans: Under special rules, you can “superfund” these college savings plans with a one-time contribution of up to five times the annual gift tax exclusion amount (for a total of $90,000 in 2024) — without incurring a gift tax or affecting your lifetime gift and estate tax exclusion. However, if you use this full amount, any gifts made to that same beneficiary over the next five years will count toward your lifetime exclusion (or use up any future increases in the annual gift tax exclusion).
  • Special spousal rules: You can avoid any estate taxes that might be due upon your passing by leaving your estate to your surviving spouse. Under the unlimited marital deduction, you can transfer any amount of money to a spouse while you’re still alive or at death — without incurring either federal gift or estate tax as long as both of you are U.S. citizens. 

Advice spotlight

Paying health care or education providers on behalf of loved ones can reduce your taxable estate. Payments of tuition or medical care made directly to educational institutions or medical providers do not incur any gift tax consequences, do not count toward the annual gift tax exclusion, and do not affect the lifetime gift and estate tax exclusion.

Learn more: Giving while living: Make lifetime gifting a part of your estate plan

Charitable giving

Donating to charitable organizations is a meaningful way to leave a legacy, provide a lasting impact to causes or institutions you care about and generate significant tax benefits:

Advice spotlight

Bundle your charitable donations within a tax year to get a bigger tax benefit. Given the high standard deduction, it may be helpful to bunch charitable donations and other expenses that are deductible in a single year or years to get a bigger benefit from itemizing. In other years, when your deductions aren’t as high, you can take the standard deduction. 

Advanced trust solutions

Specialized trusts may be an effective strategy for reducing your taxable estate while taking care of loved ones after you’re gone. Here are some of the most common advanced trust solutions:

  • Grantor retained annuity trusts let you move assets out of your taxable estate while allowing you to benefit from those same assets during your lifetime.
  • Spousal limited access trusts can be effective for those concerned about gifting too much of their wealth during their lifetime.
  • Qualified terminable interest property trusts are structured to provide for the living expenses of a surviving spouse while making sure children from a previous marriage still benefit from the estate.

Learn more: High-net-worth estate planning: When to consider advanced trusts in your plan

We’re here to help you plan your legacy

We will help you evaluate your options for preserving your estate and deepening its impact on the people, institutions and causes you care about most.

Questions to discuss with us

  • When should I start thinking about managing the value of my taxable estate?
  • Which strategies should I consider to help reduce the value of my taxable estate?
  • Am I making the most of my charitable giving strategy?
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