Death and taxes – the only things certain in life. But it is a bummer when they both hit at once. You can minimize or perhaps even avoid having to pay Federal and/or Massachusetts estate tax. You just have to know the rules of the game.
Simple strategy to save your kids over $100,000 in taxes
Facts: Barney and Betty Rubble have an estate of $4M consisting of a residence, vacation home, 401(k) plan and IRA’s, investment accounts, savings accounts and life insurance. Instead of having all assets pass directly to the surviving spouse, at least $1M passes in trust for the benefit of the surviving spouse.
Second strategy to save even more taxes
Facts: Same asset mix as above but the life insurance policies on Barney are transferred to an irrevocable trust of which Betty and Bam-Bam are the beneficiaries. Since Barney doesn’t own the policies at his death, the death proceeds are not part of his taxable estate.
If you want the accolades from the kids at the memorial service, plan to minimize the taxes.