More people than ever are entering retirement age. These citizens have worked their entire lives to earn this rest, funding their twilight years with purposeful estate planning and a lucrative retirement fund. These matriarchs and patriarchs often have large families that will also benefit from their hard work when they pass.

However, some estate plans fail to account for one final cost: estate taxes. The federal government collects these “death taxes” upon a person’s death, which can reduce a family’s estate by up to 55%. What can people do to mitigate these taxes?

Reduce estate taxes with these financial strategies

The following tactics can help people preserve their estates and continue to provide for their families after they are gone. An attorney familiar with estate planning can explore all available options, including:

  • Property transfer between spouses: Spouses may transfer property between each other tax-free. If a spouse claims joint ownership of the property upon their partner’s death, the assets will not incur estate taxes.
  • Annual gifts: Individuals may gift up to $12,000, tax-free, to any number of people each year. Parents can reduce the size of their estate and the resulting taxes by giving cash directly to their heirs every year. Spouses can even pool their annual gifts together.
  • Trusts: These accounts allow individuals to give up ownership of cash or assets, avoiding or deferring estate taxes. A lawyer can explain how each type of trust may benefit a family’s unique situation.
  • Private annuity: Parents can “sell” property to their heirs in a private annuity sale. These unsecured transactions require that the recipient pay an amount to the original owner every year until their death.
  • Charitable giving: Giving to charities not only allows individuals to claim tax breaks when filing but reduces the total value of one’s estate. Some charitable gifts even enable the owner to continue to use the asset until their death.
  • Special use real estate valuation: When calculating estate taxes, the federal government often uses the maximum property value. The Internal Revenue Service (IRS) allows homeowners to value their properties in line with their “actual use” to lower taxes considerably.

Bring questions to a real estate lawyer

Those looking for ways to reduce estate taxes can find answers with a local attorney familiar with estate planning. A lawyer can draft comprehensive legal documents, work with the probate court and help preserve a hard-earned estate.