How to Save Big and Secure Your Family’s Future Navigating the world of estate taxes can feel like trying to find your way through a pricey maze. Luckily, with strategic money management, you can minimize the taxes on your estate, ensuring more of your hard-earned assets go directly to your loved ones. Here’s a quick guide on how to keep taxes at bay and safeguard your family’s inheritance. Gifts can be golden. Spreading a little wealth now can save a lot of taxes later. Known as “annual exclusion gifts,” you can give up to $18,000 to as many people as you like without incurring yearly gift taxes. If you’re feeling generous, doubling this with your spouse means you can give away $36,000 KEEP MORE OF YOUR MONEY
HERE’S HOW I FIXED IT TOPH’S TAX TRIUMPH
I have never been one to give up without a fight. And I don’t hesitate to take a client’s case all the way to the top if that’s what it takes to win. A former golf pro and his wife recently came to me for help resolving a $100,000 IRS debt. Both were about 70 years old and still working. They had no significant assets and were living paycheck-to-paycheck, but they knew they needed to resolve their IRS debt. I suggested we present the IRS with an offer in compromise to settle their six-figure debt for about $1,000. I also helped the couple get up to date on back tax returns. The IRS refused to settle. The agency claimed that because my clients were working and collecting Social Security benefits, their income was too high to warrant a settlement. I countered by pointing out that they wanted to retire soon and were only working because they couldn’t afford to stop. I offered to include a contingency, providing for an increase in the settlement amount if my clients’ income exceeded a specified amount. The IRS still wasn’t buying it. I filed an appeal, but my arguments fell on deaf ears. Appeals officers often take a check-the-box approach rather than doing the work required to reverse a lower-ranking employee’s decision. Although one appeal is technically the end of the road, I decided to take my clients’ case all the way to the head of the IRS appeals division. I had made note of the official’s email after hearing him speak at a professional meeting, so I laid out my clients’ case clearly in an email. The next day, I got a call from an IRS officer in the official’s division. The agency soon made a counterproposal to settle for $4,500. We didn’t even have to include any of the contingencies I had offered earlier. Now, my clients are free to keep working if they want to — but they have the option of retiring, too, if they would like. Even when battling an adversary as formidable as the IRS, it pays to keep trying!
per person annually. This isn’t just a great way to reduce your taxable
estate but a perfect way to see your loved ones enjoy their inheritance while you’re still around. Stay secure with a trust. Trusts are fantastic tools to manage asset distribution after you’re gone. You can exclude certain assets from your taxable estate by setting up a trust, like an Irrevocable Life Insurance
Trust (ILIT). This means they’re protected from estate taxes, creditors, and divorce proceedings — talk about a triple win!
Step-up your basis. Here’s a little-known trick: Hold onto assets that appreciate until your death and your heirs can benefit from a “step- up in basis.” This means they will only pay taxes on the gains made from the date of your death rather than the total gains from when you first acquired the asset. It’s like pressing the reset button on potential capital gains taxes, which can be a huge relief. Minimizing estate taxes doesn’t have to be a dreary affair. With these tips and proactive steps, you can ensure more of your estate goes where you want it to — without a hefty tax bill. So, chat with a savvy estate planner and start building your plan. Your heirs will thank you, and your legacy will stretch even further!
–Toph Sheldon
2 • 513-342-4000
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