Understanding Estate Taxes
6. 3 ways to reduce estate taxes
There are basically three ways to reduce estate taxes.
First, if you are married, make sure both you and your spouse use your estate tax exemptions. In just a moment, you'll see why this is so important and how you can easily do it.
Next, is to reduce the size of your estate now. If you reduce the size of your taxable estate before you die -- by spending or giving away some assets -- you will reduce your estate taxes. But you have to make gifts correctly or you'll end up paying too much in taxes. We'll look at several ways to do this.
And, finally, you can buy life insurance to pay any remaining estate taxes at just pennies on the dollar. We'll see the wrong way and the right way to do that.
We'll start with how, if you are married, you can make sure you use both exemptions. But first, there is a very common and costly mistake many married couples make. Let's look at that first so you can be sure to avoid it.