Estate tax laws are complex and extremely difficult for the average person to understand. Unfortunately, along with this confusion, people run the risk of overpaying their estate taxes. Most people are not aware of this, but there are ways that you can reduce or eliminate your estate taxes. Without being aware of how estate taxes are calculated, it is possible that you are paying more than you should. There are several different ways to reduce or eliminate your estate taxes to ensure that you do not pay more than you should.

 Using Tax Exemptions

If you and your spouse are U.S. citizens, you can use both of your estate tax exemptions. When you die, you can leave your spouse an unlimited number of assets and he or she will owe no estate taxes. Transferring assets to your spouse in order to take advantage of exemptions can be complicated, but it is possible. In order to avoid making any costly mistakes, contact an attorney who is familiar with the process. An attorney is able to use knowledge of current laws to give you advice on reducing your estate taxes.

Removing Assets from Your Estate

You can remove some of your assets from your estate before you pass away. Federal law allows you to gift $14,000 to as many individuals as you choose to every year. This amount increases with inflation every few years, and taking advantage of this option each year can help legally reduce your estate. If you gift more than the allotted amount, however, any overage is applied to your gift tax exemption or your estate tax exemption, depending on whether the gift occurs while you are alive or after you have died. Keep in mind that any gifts to charities or for medical expenses or tuition that are paid directly to the organization are nontaxable and unlimited.

 Utilizing Trusts

There are a variety of trusts that you can use to eliminate certain assets from your estate. For example, the value of your insurance policies can be eliminated from your estate by designating an Irrevocable Life Insurance Trust (ILIT) to the policy owner. Death benefits will only be included in your estate if you die within three years of the transfer. There are also Qualified Personal Residence Trusts (QPRTs), Grantor Retained Annuity Trusts (GRATs), Charitable Remainder Trusts (CRTs), Charitable Lead Trusts (CLTs), and many more to consider. Trusts are a way to secure a future for your family members after you are gone while reducing future estate taxes.

 Contact Us for Assistance

To ensure that you and your beneficiaries are not paying more than you should for estate taxes, you should consult with an experienced estate planning attorney who knows the law, all of the state and federal exemptions and exceptions, and how to effectively plan your estate to ensure that your assets are protected from unnecessary taxes. MMZ Law understands how stressful planning your estate is. Contact us (909) 256-6702 today to schedule a FREE consultation to discuss your unique needs. We are located in the Claremont Village near surrounding cities of Pomona, Upland, Ontario and Rancho Cucamonga.



341 W. 1st St. Suite 100
Claremont, CA 91711

MARIVEL M. ZIALCITA is the founder of MMZ LAW, A Professional Corporation, where she practices in the areas of trust and estate, elder law, special needs, conservatorship, trust administration, and probate. Ms. Zialcita is a frequent speaker on trust and estate matters and holds memberships in the State Bar of California, Trust and Estate Section, The San Bernardino County Bar Association, Wealth Counsel and Elder Counsel. She currently assists in the pro bono legal services program at the James L. Brulte Senior Center in Rancho Cucamonga, California. She is based in Claremont but assists clients throughout Southern California.

This information is educational information only and not legal advice.