Top 3 Ways to Avoid Inheritance Tax

Avoid inheritance tax is a frequently asked question among individuals. We all look for ways to avoid the inheritance tax. We have compiled three ways in which you can avoid inheritance tax. 

 

 

Put property in a trust

 

If you put some portions of the property, assets, and investment in a trust, then they are no longer a part of the estate for inheritance taxes. This means that your spouse and your kids under 18 years of age will not be able to benefit from it. For example, you can set up a trust for your grandchildren’s education or for supporting a disabled family member. Either you can set up a trust or you can put one in your will. However, one must keep in mind the fact that some trusts have their tax structures and one might have to pay inheritance taxes. It is better to take advice from experts when setting up a trust. 

 

Leave money for charities

 

A good way to avoid inheritance tax is to leave money for charitable organizations. This is a good way to avoid inheritance taxes and also benefit from a great cause. If you leave ten percent of the total property to charity, it will have an impact on the inheritance tax amount that you will have to pay. Inheritance tax is calculated at 40%. But if you leave a certain portion to charity, then it is calculated at 36%. 

 

This might not lead to huge savings on your part but it will mean that your heirs and beneficiaries will receive more than they would get otherwise. And as a result, charitable organizations will also benefit from this step.


 

Taking out a life insurance policy

 

To avoid inheritance tax, one can also take out a life insurance policy. This will not reduce the amount that you need to pay as inheritance tax. But the payout will be much easier for the heirs or the beneficiaries. This will mean that they will be able to prevent their family home from getting sold. To enable this, you need to make sure that the life insurance goes into the trust set up by you. If you do not do that, the estate value will be bigger and you will pay more tax. 

 

Therefore these are some of the ways how you can avoid inheritance tax and save more for your heirs.

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