STRATEGIES TO POTENTIONALLY REDUCE THE VALUE OF YOUR ESTATE

^{By Louis Green, CFA®, CFP®, CRPS®}

Strategies To Potentially Reduce The Value Of Your Estate

Gifting

Gifting is another effective strategy to reduce the value of your estate and potential estate taxes.

For example, you are allowed to give up to $18,000 a year (in 2024) to another person under the annual gift tax exclusion without reporting the gift to the IRS. If you are married, you are allowed to split your gift with your spouse, effectively doubling the amount you can give. However, if you choose to split your gift, you must file a gift tax return.

Exclusion for Medical and Educational Expenses

Another way to give to someone without having to declare a taxable gift is to pay their medical bills or tuition directly. However, be sure to follow all the rules required to qualify your payment for the exclusion.¹   

529 Contributions

A 529 contribution can help fund tuition for someone you love while reducing the value of your estate. You can contribute up to $18,000 a year (2024) to a single plan without impacting your lifetime gift tax exemption. You can maximize a 529 contribution to an individual’s 529 plan by funding five years’ worth of contributions in a single year. This will allow you to contribute $90,000 ($18,000 x 5) or $180,000 in 2024 if you split the gift with your spouse.¹

Family Limited Partnership

If you are a business owner, consider consulting with an estate attorney to discuss a family limited partnership.² This strategy can enable you to take advantage of the annual gift exclusion by gifting shares of your business to others (such as children and grandchildren) in a tax-efficient manner.

Employee Stock Ownership Plan

An employee stock ownership plan (ESOP)³ is another option for business owners to consider. An ESOP allows you to sell some or all of your business to employees in a tax-efficient manner. Consult with an advisor who understands the nuances of an ESOP before pursuing this strategy.

Let’s Talk

Find out how Prestiq Wealth can help you create a comprehensive financial plan based on their book, 5 Steps To Retirement Planning.

LET'S TALK

All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).

1 https://www.forvismazars.us/forsights/2024/02/simple-effective-gifting-strategies

2 https://www.investopedia.com/terms/f/familylimitedpartnership.asp

3 https://www.esop.org/articles/employee-stock-ownership-plan-esop-basics.php