Tax Planning

5 Tips to Save on Estate Taxes

December 20, 2016

As seen on WJAR NBC 10 Smart Advice

With tax season approaching, there are a number of techniques you should consider to help you save on your estate taxes.

Estate taxes are those charged by the government on assets owned at death if the value of the assets exceeds the available exemptions. The tax liability at the federal level is imposed on assets over the exemption of $5.45 Million in 2016. Some states, like Connecticut, Massachusetts, New York and Rhode Island, impose a separate tax, and the exemptions granted are not as generous as the federal exemption. Massachusetts has one of the lowest estate tax exemptions, currently $1 Million per person in 2016.

The liabilities for these taxes must be paid within nine months after death, but may be minimized with the following techniques:

1. Credit Shelter Trust: This type of trust is used by married couples to hold assets up to the available estate tax exemptions at the death of the first spouse, protecting the trust assets from being taxable in the surviving spouses’ estate.

2. Lifetime Gifts: Gifts may be made within the annual gift tax exclusion to any individual without any reporting to the government and without using any of the estate tax exemptions available at death. Additionally, direct payments of qualified tuition and certain health expenses for the benefit of another person may be made without any gift and estate tax consequences.

3. Portability: Portability of unused estate tax exemption is only available for married couples for federal estate tax purposes. If portability has been properly elected, a surviving spouse can use the unused exemption of the predeceased spouse.

4. Continuing trusts for children: When assets pass at death to children outright and free of trust, the assets become part of the child’s taxable estate for estate tax purposes. Alternatively, assets may pass in trust for children, and if properly drafted, the trust will avoid estate tax in the children’s estates.

5. Irrevocable Life Insurance Trusts: Insurance transferred to or purchased directly by an irrevocable trust provides replacement assets for the benefit of family members and are excluded from the insured’s taxable estate so long as the insured has not retained any ownership rights over the policy.

For smart advice that’s focused on your unique financial goals, contact Washington Trust Wealth Management at 800-582-1076, email us at or visit us at

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