When it comes to estate planning, the decisions you make can affect the amount of capital gains tax that is assessed to your estate. Capital gains taxes can affect your beneficiaries tax situation and diminish your estate's value. High-value estates are particularly vulnerable. The value of your property and assets as of the date of your death determine your capital gains taxes.
The following strategies can help you to reorganize your plans to protect your estate and loved ones.
Take the home sale gain exclusion
It is possible for you to take the home sale gain exclusion and use it to offset your estate's capital gains taxes. If you have lived in a property for at least two years before selling it, you can exclude up to $250,000 portion of your capital gain. The exclusion amount is double for married individuals. The two-year window must occur within the immediate five-year window before the sale date.
Eliminate or modify a trust
If you have assets that are in a trust, you should consider removing them from the trust so you can add them back into your estate. Assets that you gift in trusts are no longer a part of your estate. For example, you gift one of your properties to one of your children. That action prevents you from making the home your residence unless you lease it or pay rent. If you update your estate plans to specify that you are changing the terms of the first trust involving that property, you can reincorporate back into your estate.
Other strategies are available that can help to minimize tax complications with your estate plans. You should research your options and consider making adjustments that can benefit your estate in the long run. If you need help with the matter, you should speak to an attorney about your situation to learn your options.