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16. Exchanging Annuities

You can roll-over a weak under-performing annuity into a stronger, more competitive annuity, without having to pay deferred income taxes.

Thanks to Section 1035 of the Internal Revenue Code, no income taxes are paid on any of your annuity's growth during the course of the transfer.

 

17. Use Your Unified Credit

In 2002, every U.S. citizen can shelter up to $1,000,000 from estate taxes at death. But did you know you could use that gift now?

You can use the Unified Credit during your lifetime, and gift up to $1,000,000 completely tax-free ($2 million for couples). This is ideal when gifting appreciating assets that could be worth much more in the future.

The Unified Credit can save significant additional tax dollars when utilized as part of a Shrinking Trust plan. A qualified SaveWealth Advisor can explain more about this strategy.

The Unified Credit will gradually increase until estate taxes completely disappear in 2010. But before you begin celebrating, consider this: current legislation brings estate taxes the very next year in 2011 back to their current levels. And the Unified Credit will only protect your assets at the current $1 million mark.

 

18. Reducing Taxes Through Trusts

It is easy to minimize the estate tax bill after you and your spouse pass away by doing some basic estate planning.

By setting up an A/B Trust, your Trust will allow you to use you and your spouse's Unified Credit much more efficiently.

Not only can you save money on estate taxes, but your specific requests will be carried through, and your heirs will see much more of your hard-earned wealth pass to them estate tax-free.

 

19. Give to Those You Love

When preparing your estate plan, an easy way to reduce immediate income taxes is by bequeathing assets to your spouse.

The Unlimited Marital Tax Deduction allows all property in one spouse's estate to pass gift tax-free and estate tax-free to the other spouse.

This strategy is ideal for estates under $1 million in net worth. Estates over that value can use estate planning techniques to effectively double the amount of assets that can be transferred to loved ones, estate tax-free.

 

20. Consider a QTIP

Have you heard about QTIPs? And we don't mean the one for your ears.

A Qualified Terminable Interest Property Trust (QTIP), similar to an A/B Trust, takes full advantage of the Unlimited Marital Deduction. Unlike an A/B Trust, however, a separate trustee will determine distributions after the second spouse passes away.

The QTIP is especially useful in situations where a second marriage has occurred, and the grantor wishes to ensure children from a previous marriage are partial (if not whole) beneficiaries of the grantor's estate.

 

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Tax Breaks Include

Capital Gains
Mortgage and Equity
Education Tax Breaks
Gifting Options
Sheltering Rental Income
Using Your Unified Credit
Social Security
Tax-Free Munis
Estate Tax Reductions
Life Insurance
IRAs and 401k Plans
And much more
   

 

 
 
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