As someone who lives in Minnesota and has a valuable estate, you may have concerns about how much of it your beneficiaries will ultimately lose to estate taxes. While the threshold for having to pay estate taxes changes from one year to the next, if your estate has a value in excess of about $2.7 million, you may lose a significant portion of what you have worked hard to save to estate taxes.
Luckily, though, there are a number of efforts you can make that should reduce the amount your loved ones will lose out of their inheritances. So, what might you be able to do to reduce your estate tax burden in Minnesota?
Enter your assets into trusts
Many people across Minnesota who have valuable estates find that the most effective way to reduce their estate tax burden is to establish trusts and move assets into them. Why? By placing assets into trusts during the estate planning process, you are shielding them from taxation, but you do have to give control over the trust to someone else. Many people find that, by appointing a trustee who is a close family member or confidante, they can enjoy the benefits that come with trusts without being fearful about releasing control over the assets inside them.
Start giving away your wealth now
Another method you can utilize to reduce how much your loved ones will lose to taxes once you pass away is to start distributing some of your wealth now. You may, for example, decide to donate money to charitable causes of relevance or interest to you, or you may decide to start giving your children or grandchildren regular installments of a set amount.
At the end of the day, you worked hard to amass the wealth that you now have, and chances are, you want to avoid losing as much of it as you can to Uncle Sam. By utilizing these two methods, you will likely be able to reduce the value of your estate, and as a result, reduce the amount your loved ones lose to estate taxes.
