How can I reduce the estate tax burden?

Estate tax is a type of tax levied by state governments on the transfer of a person’s assets upon their death. Estate taxes can be burdensome for those with higher net worth, significantly reducing the inheritance for their family. In Maryland, the estate tax rate is 16%. Fortunately, there are a few strategies that can be used to reduce the estate tax burden. First, gifts of money and other assets made during one’s lifetime may be exempt from estate tax. For example, if a person gifts up to $15,000 per year to an individual, that gift is exempt from taxation. Establishing a trust can also reduce the tax burden, as trusts can be used to hold assets and the taxes due can be spread over several years. Other strategies include increasing the lifespans of your investments. If you can extend the time period during which you hold a given asset, the value of that asset can increase and the resulting taxes due would be spread out over a longer period of time. Additionally, charitable giving can be used to reduce estate taxes. Gifts to qualifying charities and nonprofits may reduce the estate taxes due when filing a final tax return. In order to reduce the estate tax burden, it is important to consult with an estate planning lawyer to understand the various tax laws and to determine the best strategies to reduce the amount of taxes due.

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How can I reduce the estate tax burden?

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