Maximizing Tax Savings Through Effective Estate Planning

By: Layne Blasingim, CPA

Estate planning isn’t just about figuring out who receives your assets when you pass; it’s also a strategic approach to minimize possible tax liabilities. With careful planning, individuals can ensure that their hard-earned wealth goes to their intended heirs rather than paid out in taxes.¬† Savvy estate planning can use a mix of the following strategies to secure substantial tax savings.

Lifetime Gifting: Gifting assets during one’s lifetime can be a powerful estate planning tool for reducing the size of an estate. The annual gift tax exclusion allows individuals to gift a certain amount to each recipient tax-free. In 2024, you can give $18,000 to each recipient with no tax reporting requirements. Additionally, strategic gifting of appreciating assets can remove future appreciation from your estate.

Establish Trusts: Trusts are versatile instruments that offer numerous benefits, including tax efficiency. Irrevocable trusts, such as irrevocable life insurance trusts and charitable remainder trusts, can remove assets from an individual’s estate while providing for heirs or philanthropic causes. Revocable trusts can also be a great tool that allows you to retain control of any assets that are placed in the trust but then become irrevocable upon your passing. You can name beneficiaries of the trust upon your death, how much each beneficiary can receive from the trust each year, and what the money can be used for. The use of trusts may also help expedite the probate process for your loved ones.

Take Advantage of Tax Credits and Exemptions: Keeping up to date of changes in tax laws and taking advantage of available credits and exemptions is crucial for effective estate planning.

Plan for Business Succession: For business owners, proper succession planning is essential not only for continuity but also for minimizing tax burdens. Strategies such as transferring ownership through gradual gifting can help reduce estate taxes while facilitating a smooth transition of business assets to the next generation.

Estate planning offers opportunities for tax savings when approached with foresight and strategy. By leveraging various tools and techniques, individuals can preserve their wealth for their heirs and charitable causes while minimizing the impact of taxes on their estate.

Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact Elaine Dougherty, CPA at 304.554.3371 or edougherty@suttlecpas.com. You may also contact Layne Blasingim, CPA at lblasingim@suttlecpas.com.