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Trusts can provide the means to reduce estate taxes

The Tax Cut and Jobs Act of 2017 provided people with additional options regarding transfer of property through estate planning and the use of the gift tax exemption in Washington. The lifetime amount that a person can gift increased to $11.4 million for a single person or $22.8 million for a couple. The gifted amount is typically exempted from gift and estate taxes depending on what is given and when. Establishing trusts is one way to establish such gifts.

People looking to gift a portion of their estate to reduce the estate tax liability may give monetary gifts in the form of college tuition, a wedding or a charitable contribution. Another option that is available is the gift of real estate. Gifting real estate allows one to take advantage of the gift allowance without detracting from the value of liquid assets.

A person may want to retain the right to live in the property for a period of time. Creating a trust allows a person to remain in the home while transferring the property itself to a trust held for the beneficiary. This trust is called a qualified personal residence trust (QPRT). Another option is known as a gift lease. This allows the grantor to lease back the property from the beneficiary and is also typically set up as a trust.

Structuring an estate plan that takes full advantage of current tax benefits is a way to ensure that one's beneficiaries receive the benefit of one's amassed estate with limited tax implications. Trusts provide an excellent vehicle for accomplishing that goal. An estate planning professional in Washington can review a person's finances and help one to craft a plan that accomplishes the grantor's final wishes.

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