A common objective of someone involved in estate planning is minimising or avoiding inheritance tax. There are indeed some strategies to employ to avoid inheritance tax on property. The action you take to avoid inheritance tax depends to a large degree on the type of property at issue. You are wise to avoid attempting to take a one-size-fits-all approach to minimising or avoiding inheritance tax on property.
Make a list of property you intend to pass to specific individuals upon your death.
Add the name of the person to the deed. Specifically, prepare a quitclaim deed that transfers the interest in real estate from you to your intended heir with the following notation: "as joint tenants with rights of survivorship." The term "tenants" in this situation is not to be confused with a lease arrangement. "Joint tenants" in this situation references more than one individual with an interest in real estate. At your death, the ownership of this property passes to the other person outside the probate process and is not subject to inheritance tax.
Change an automobile title to include both you and the person you desire to have the car at your death. The auto title will name both you and this individual as joint owners with a right of survivorship. Ownership of the vehicle passes to the designated individual outside of an estate and is not subject to inheritance tax.
Alter the manner in which your bank and other financial accounts are established. Instead of merely listing yourself as the owner, designate your intended inheritor as a contingent owner following your death. This individual is granted a survivorship interest in such an account. The asset automatically becomes the property of the person identified after your death, outside the estate and probate process and without the imposition of inheritance tax.
Create a trust in which to place other assets that are not subject to an automatic transfer through a survivorship provision in ownership documents. In fact, you can elect to put all your assets into a trust if you intend for your property to go to a single person or to be shared equally among multiple individuals.
Obtain a sample or form trust agreement to help you in drafting your own agreement. These templates are available from office supply stores.
Consider hiring an attorney to assist in all aspects of proper estate planning. In some instances, working to avoid inheritance tax on property becomes a complex endeavour. Even a slight mistake defeats the ability to avoid this type of inheritance tax liability. Local and state bar associations maintain directories of lawyers in various practice areas, including estate and probate law. Contact information for these organisations is available through the American Bar Association.