Have your client consider giving away some of his assets during his lifetime instead of waiting until he dies to pass gifts on. If he can afford to do this while he is still living, he 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.
Have your client consider moving to another state. This move may save him in income tax as well as estate, property and sales taxes depending on the state to which he moves. Alaska, Wyoming, Florida, Nevada, Washington, South Dakota and Texas do not have income tax.
Make sure your client is contributing the maximum amount possible to employer-sponsored retirement plans.
Have your client consider withdrawing retirement funds early. Large retirement account balances left behind when one dies may be subject to both estate and income taxes. These taxes can significantly reduce the balance left to one's heirs.
Have your client 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 client's child to live while away at college, have him consider buying property that his child could instead rent from him.
If your client serves on a company's board of directors and earns income for it, he 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 he contributes.
Have your client consider withdrawing IRA funds for 60 days rather than borrowing short-term funds from a third-party. Be careful though, to avoid taxes, he must follow certain procedures.
