How to Avoid Paying Inheritance Tax (without breaking the law)

It is indeed possible to avoid paying inheritance tax, and not break the law. The key to knowing how to pull this off legally, is to first have a small insight into what it is and what the government policies on it are. Trying to get out of it is the same as trying to circumvent estate toll- the two terms are the same. In accordance to the TaxAct of 2001, the estate duty will be removed for one year- that is 2010 and then brought back the year after. Congress can however change this anytime and can even reinstate the federal levy in 2010. The recent law is that estates under $1M would get their levies reinstated while those over $1M cannot avoid paying inheritance tax, and may even be charged up to 55% duty. Once again, if the heritage is under $1M, there is no toll due. The key to avoid paying inheritance tax is to try and make sure that the estate is below the taxable amount.

The first thing to do on trying to legally avoid paying inheritance tax is to calculate what the total worth of your estate is. You cannot go cheap on this and you will need the help of property assessors and people that know how to place a value on items like jewelry, art, antiques, etc. Mistakes here can be costly for your heir or for you- the heir. If you found that your estate is less than a million, you do not have to do anything for now. However, check this annually to see if the $1M has been lowered or raised or if your estate’s value has increased. Laws in this area are very variable.

If it does exceed, you must calculate the amount of valuables that you would need to remove to make it under the $1M mark to be able to avoid paying inheritance tax. However, you do not need to try and avoid paying inheritance tax if you are going to leave all your property to your spouse, who should be a US citizen, because the total estate toll becomes exempt in this scenario.

After this, you will need to know whether you want to leave your assets to your spouse or children. You can also leave it to your partner or charities. Another good aspect is that you can leave $13,000 worth in gifts to one person every annum without getting taxed on it. The only problem with this method is that you cannot ensure that you will get your money back if you somehow need it before dying. Moreover, if you die unexpectedly, your estate heirs may still not be able to avoid paying inheritance tax, if it is over the taxable limit.

There are still many different ways to avoid paying inheritance taxlegally. It is best to hire a lawyer for this matter and get his take on it. A good one will show you various ways and then you can have your pick on it.