Estate Planning Tools for Reducing Your Taxes

Full Video Transcript

There are various estate planning mechanisms available to help you defer, minimize, or even avoid certain taxes, including capital gains, estate taxes, or others. You may have heard of some of them, such as 1031 exchanges, private annuities, trusts, charitable donations, installment sales, and others. Basically, you sell, exchange, or transfer property into a trust, as applicable, through a very structured format. By virtue of doing so, the proceeds you realize from the appreciation of the property are paid to you in a way that takes advantage of tax benefits under the IRS rules. For example, the funds may be paid to you in installments throughout your life, or the asset may be valued in special ways, either of which are designed to trigger only minimal taxes. However, these kinds of transactions require very careful planning and must be executed properly. And since the tax rules often change from year to year, you should make sure the option you’re considering is available for your particular situation.