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Effective Estate Management And Minimizing Tax Burden

George Sterling | Monday, September 24th, 2012

Effective estate planning is vital as ineffective management of your estate can lead to higher taxes and ultimately, higher tax burden.

There are many professionals out there that can help you manage your estate to make sure that whenever your fortune is passed to your family, they are able to reap the maximum benefits out of it instead of getting entangled in heaps of taxes.

Irrespective of the kind of life you are living or your relationship status, if you are interested in finding out more about effective estate management and how to avoid heavy taxation, here are a few tips:

Planning Is Important

Many wealthy individuals tend to spend their entire fortune in their lifetime and think of estate management as a waste of time. Lacks of planning is suitable for those who are single and like a lavish lifestyle. For instance, if you are 50 years of age, have a lot of money and no wife/husband and kids, lack of planning won’t harm you in any way.

However, if you do have a family to think about, estate planning should be on the top of your agenda. Estate management or planning is not a waste of time and it will help your family to a great extent.

Reducing Your Tax Liability

If you want to reduce your tax liability, give some of your assets to irrevocable trusts. If you give up the choice of making changes to irrevocable trusts, the choice will be permanent and you cannot go back. You might be given this choice by an estate planning attorney for many reasons. However, once some of your assets are taken away (which were previously linked to your real estate), your tax liability will drop and ultimately, you will owe fewer taxes to the state.

Set Up A Living Trust

A married couple can go for the option of setting up a living trust in order to avoid paying few of the most known and common taxes. Setting up a living trust is not difficult as you can get all the guidance you need to do so by sitting down with an attorney and doing some research.

An advantage of this trust is that it is revocable unlike the one mentioned before. A revocable trust gives you the option of getting rid of the agreement you signed before to set up the trust if something happens. However, once you change the agreement or opt out of the trust, your tax liability will increase.

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