Local Law Firms Home > Taxation Tax Law Overview > Protecting Assets There are many ways of protecting assets from all kinds of local, state and federal taxation and tax issues. Income taxes on capital gains can be deferred or reduced through qualified tax-advantaged investments and strategic gifting. Estate and gift taxes can be avoided by setting up trusts, making annual gifts and using the unified credit exemption. Property taxes generally have to be paid, but there may be loopholes depending on what the property is being used for. Listed below are the major issues relating to tax on assets, possible threats and solutions therein:
Asset protection is a serious business and there are complex strategies that have been developed to shield your assets from other liabilities, debts and taxation. For example, capital gains are considered as income and can be taxed as such unless the asset is a part of a qualified investment plan, like an IRA. You can also reduce the tax burden by gifting assets using the annual $13,000 limit and the $5 million once in a lifetime unified credit. For protecting larger assets, it may be prudent to set up a revocable living trust. It will protect the assets from probate costs and estate taxes, but not from other creditors and liabilities. Major problems like tax liens imposed by the IRS may have to be handled differently, by asking for a CDP hearing or taking the matter to tax court. Do you have additional legal questions regarding asset protection? Our taxl awyers can help! Contact a local taxation law attorney today for more information.
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