Want to win the estate-tax game? Think gifts, leveraged gifts. Gifts to your family during life represent a major tax-planning strategy. Gifts can move income within the family unit, remove income from your estate and provide money for the education of future generations. In this example, all gifts are made by Joe (who is married to Mary) to his children or grandchildren. Gifts can help divide family income and take advantage of the zero or low-income tax bracket of one or more family members. This strategy accomplishes two sure savings: 1) income tax-transfers income-produced by the asset gifted-from Joe's high bracket to the low bracket of the children and/or grandchildren, and 2) estate tax-the asset is removed from Joe's estate.
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