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Trust transfers to reduce your tax burden

On Behalf of | Nov 16, 2021 | Trusts |

Taxation is a delicate matter when you have a large estate. The impact of taxes grows as your wealth grows. No one should ever consider evading taxes, as doing so is illegal. Regardless, there are ways to eliminate or reduce taxes legally. Knowing the law is how you develop the right asset transfer strategies. The state of Connecticut will assess your tax compliance and tax you based on legality.

Diverting taxes via income

If you can limit your taxation to income, then opening a trust to hedge your wealth can eliminate estate taxes. Trusts are at the center of the most effective asset transfer strategies known. Making this tax shelter work, however, calls for a few income-generating assets. Sure, you don’t need to produce income, but when you have stocks in a trust, only what the stocks earn becomes taxable. Making the most of this strategy often calls for irrevocable trust.

Using private assets

Properties you owe less than $5,000 on aren’t seized by the IRS. This is an example of how some assets, under the right conditions, remain private and thus sheltered from a tax. For the purpose of privacy, many estate owners rely on trusts. These arrangements cannot be entered into by a judge or the IRS. The contents of a trust are only known to you, a trustee and beneficiary who’s to receive the trust. Overall, anything that isn’t disclosable isn’t taxed.

Asset transfer strategies in Connecticut

Keep in mind that avoiding taxes is done by using legal means to reduce or delay taxation. On the other hand, you want to refrain from evading taxes, which is outright denying the tax liability you have. Now be sure to seek help from a lawyer so that you work within a legal framework.