Consider giving away some of your assets during your lifetime instead of waiting until you die to pass gifts on. If you can afford to do this while you are still living, you can save on estate taxes on the gifted assets as well as on any future appreciation of the gifted assets. An individual can transfer up to $650,000 free of federal estate and gift tax. This amount will raise every year until 2006 when it will reach $1,000,000.
Consider moving to another state. This move may save you in income tax as well as estate, property and sales taxes depending on the state to which you move. Alaska, Wyoming, Florida, Nevada, Washington, South Dakota and Texas do not have income tax.
Make sure you are contributing the maximum amount possible to employer-sponsored retirement plans.
Consider withdrawing retirement funds early. Large retirement account balances left behind when you die may be subject to both estate and income taxes. These taxes can significantly reduce the balance left to your heirs.
Think about the advantages of establishing a defective gantor trust. While this type of trust is disadvantageous when it comes to income taxes as the person who established the account will continue to pay the tax on the income earned by the trust, it is an effective when it comes to estate-planning purposes.
Instead of renting a place for your child to live while away at college, consider buying property that your child could instead rent from you.
If you serve on a company's board of directors and earn income for it, you may be able to make a contribution to a tax-deferred self-employed retirement account and receive a current income tax deduction for the amount you contribute.
Consider withdrawing IRA funds for 60 days rather than borrowing short-term funds from a third-party. Be careful though, to avoid taxes, you must follow certain procedures.
