Reducing Taxes With Estate Planning

Though Estate Planning usually brings taxes in its wake, there are a number of measures which can be resorted to so that your taxes can be reduced. The great thing about estate planning is that you can do all this planning and financial organizing well before your death so that you do not leave your loved ones with the burden of running around trying to get things in order.

Let's take a look at some of the ways that the taxes can be reduced. Probably the first step you could take is to set up life insurance trusts and these should be irrevocable and unchangeable. After you have done this, you need to transfer all your assets to this trust so that you don't own anything anymore – the trust does. Now this is absolutely legal and accepted and it also means that no one else can misuse your money. It might be a close relation, even immediate family but it is always better to have things tied up so that you can carry on being able to pay up the policy payments and things are not tampered with.

If you want to save tax on your assets, do keep a few things in mind. Firstly, you cannot be the trustee even if you were the owner of all the assets and you should have set up the trust a good three years before you pass away otherwise it will not be accepted. This period of three years means that there is enough of a time span for the trust to be properly administered. Once the trust has been formed, you are no longer the owner of the assets and if you do behave as though you were, the trust will not be operable and the assets will go back under the purview of the regular taxation schemes in place.

Life insurance trusts can get a bit complicated with all the finer details and points so it is always better to have a trusted lawyer to not just explain things to you but also to administer everything so that things go through smoothly.

To reduce taxes, you could also transfer ownership of your assets to another person and if you do this, then the onus of taxation is not upon you. There are certain disadvantages here, though. Once the transfer has been done, you lose all say in what is to be done with the property and assets. Now this is especially so in the case of a divorce where you just will not be able to specify what should or should not be done with the property. Probably less complicated and safer would be to transfer it to your children and this transfer procedure can be done very quickly and very simply – all it takes is a simple transfer paper that needs to be signed. Then, when it comes to things like the premiums, the one to whom it has been transferred will have to pay. All you need to do is to make sure that a notification is sent to the insurance company concerned.

If you do a good job of this, estate duty can be avoided and that could just be a huge tax saving depending on the amount of assets you own.