Estate tax is a controversial issue in Texas. There are certain methods you can use in order to minimize your contributions. Employing them will help you pass on a larger portion of your assets to your heirs.
Create a family limited partnership
Estate planning can involve a wide range of possible creations. A family-limited partnership is one of the most effective ways to minimize taxation. You can set up this arrangement in order to transfer assets to your children after you pass.
This will involve creating a general partnership. Once you have done so, you can list your heirs as your limited partners. You will retain the role of general partner.
As the creator of the partnership, you will make the ultimate decisions. Your partners will possess a stake in the company. They may also own a portion of the assets. This will lead to an estate that is smaller in size than the average example. However, the level of taxation that you are subject to will also be smaller by comparison.
Establish an irrevocable life insurance trust
One of the best methods to avoid paying estate taxes may be to set up an irrevocable trust. This particular trust will concern the policy of life insurance that you purchase to cover your family after you pass.
The ownership of the irrevocable life insurance trust that you create can be transferred to another person. This trust is irrevocable because you can’t make future adjustments without the consent of the trust’s beneficiaries.
Once you transfer ownership of this policy, your death benefits are no longer part of your estate. However, this is not the case should you die within three years of this transfer. This plan should therefore be employed as soon as it is decided on.