Estate Planning and Taxes

In today’s society estate planning and taxes are so closely intertwined that many people think that saving taxes is what estate planning is all about. Of course, if you've read Basics of Estate Planning then you already know that estate planning is about much more than just taxes.

In fact, before taxes are even relevant, you first have to earn, save and invest money wisely. But, hopefully you are able to do that and you begin to make a nice income. That’s when you should be sure you are managing your affairs the best way possible to minimize the taxes you pay.

I recently received a chain e-mail that was circulating around. You may have seen it yourself. It listed all the taxes the average person pays today. Absolutely amazing. Our society is saturated with taxes from top to bottom.

Of course everyone knows about the income taxes they pay (due every April 15th). But, you may not think about the many other taxes that, for most people, are cumulatively much larger.

Here’s a few:

Estate tax relief
  • Sales Taxes
  • Property Taxes
  • Social security Taxes
  • Medicare and Medicaid Taxes
  • Business Taxes
  • Airport Taxes
  • Road Tolls
  • Tariffs
  • Vehicle Taxes
  • Insurance Taxes
  • Transfer Taxes
  • Capital Gains Taxes
  • Inheritance Taxes
  • Health Care Taxes
  • Etc, etc, etc.

Even if you want to give something away – you might be rewarded with a gift tax  or probate tax as thanks for your generosity.

And maybe the most insidious tax of all is the cost of compliance with all these taxes. That cost is essentially yet another tax. You know, the money you pay your accountant every year to figure out your taxes. Also, the time you spend/waste keeping up with changes in tax laws; getting all your tax information together; filling out forms, etc.

Undoubtedly taxes are a major hindrance and constant drag as you travel the road towards capital and wealth creation.

Of course, when you think of estate planning and taxes, the first thing you think of is the estate tax (often called “death tax” or “inheritance tax”) which can tax both probate and non-probate property. You probably have heard about the recent estate tax changes. You can read more about that at estate tax.

The bottom line is that if you can legally avoid taxes you can obviously accumulate wealth more quickly. So how do you avoid taxes -- legally?

The only way is to make the tax code work for you. The tax laws provide various ways (i.e. “tax shelters”) to lessen your tax burden. I dare say that for every tax our politicians impose, they provide 3 tax shelters to benefit those that can use them.

If you own your home, that is a wonderful tax shelter. You probably can deduct your mortgage interest, points, and property insurance from your taxable income.

Another wonderful tax shelter is owning your own business. That can be a terrific way to legally avoid taxes. The reason is that when you own a business, potentially, you can deduct many expenses that employees cannot deduct. (More about this at best low cost investment.)

Individual Retirement Accounts (IRA’s); 401k’s; Section 527 Plans; Education Savings Accounts, etc – all can provide great tax advantages.

If you are an employee, your fringe benefit plan may offer you great opportunity to enhance your estate plan by avoiding taxes. You can read more about that at Fringe Benefit Plans.

Please Read These Other Related Pages:

New! Comments

Leave a comment about this article in the box below and share it with your Facebook friends.

What's On Your Mind?

We'd love to hear your comments or opinions. Submit them here and other visitors can read them and comment on them. An e-mail address is not required.

What Other Visitors Have Said

Click below to see contributions from other visitors to this page...

Trump - GOP Tax Plan Not rated yet
I think this is the first time I've ever posted about politics here. I just think I should post this so people know what is really happening regarding … is the Best Way to Save Receipts  Not rated yet
It's a pain to keep track of all those receipts for taxes. But, is a great new way to use technology to make it much easier. …

Click here to write your own.

From Estate Planning and Taxes to Estate Planning Hub | Estate Planning Blog | Basics of Estate Planning | Selecting a Financial Planner | Is This Good Time to Buy a House? | Incorporate My Business | Best Low Cost Investment | Fringe Benefit Plans | Estate Planning and Charitable Giving | Health Insurance Comparisons | Best Medicare Supplement Plan | Medicaid Questions | Retirement and Estate Planning | What is a Power of Attorney? | Current Estate Planning News | Estate Planning Forum | Living will in estate planning | Estate Planning Blogs | Estate Planning Books | Choosing an Estate Planning Attorney | Find a Probate Attorney | Estate Planning Questions |

Home Page

About Us | Contact Us | Site Search | Terms of Use

Subscribe to
Estate Planning Hub

Your First Name

Your E-mail Address

We keep this private.

Follow the Estate Planning Blog.

--by Beth Heikkinen
Marquette, Michigan
I just want to thank you for this site. It answered my questions. I think many people that do research on the net take it for granted and when they find what they are looking for they forget "someone put time, money, etc into providing me with this information."

Thank you!

Like This Site

Visit Our Social Media Pages

Become a Fan of Estate Planning Hub on Facebook Follow EstatePlanningHub on Twitter Follow EstatePlanningHub on Google+ Subscribe EstatePlanningHub Video on YouTube

Get a PDF version of this website and its sister site here.