How to Minimize Estate Tax

Estate taxes may be imposed on estates that are valued at or above one million dollars.

One way you can minimize your estate tax is simply by reducing the value of your estate. If it's below one million dollars, no estate tax will be owed. One way to minimize the value is to make lifetime gifts. Some gifts over $12,000 may be susceptible to a gift tax [source: Axa Equitable].


Some lifetime gifts that do not trigger a gift tax include:

  • Gifts made to your spouse, if he or she is a United States citizen
  • Gifts (under a certain monetary amount) made to your spouse, if he or she is not a United States citizen
  • Gifts made to certain charities
  • Tuition or medical expenses paid on behalf of others may sometimes be considered lifetime gifts [Source: Axa Equitable].

Another way to minimize your estate taxes is to transfer your assets into an irrevocable trust. (This transfer may or may not be subject to a gift tax.)

If your inheritor doesn't need the assets from your estate, it would be a good idea for him or her to make a qualified disclaimer. This is especially true if the inheritor is your spouse, in which case the estate will be subject to taxation again when he or she dies. If the assets are passed on to a named beneficiary in the next generation via a disclaimer, no gift, state or generation-skipping transfer (GST) taxes will apply [source: Mandell].

The above tips are for minimizing federal estate taxes only. Federal estate tax laws are subject to change. You should consult with a qualified tax attorney to discuss whether these techniques are applicable and advisable in your specific situation. You should also be sure to ask your attorney about state death taxes.