If your estate exceeds $5.43 million, then you might consider doing the following:
Make sure to use your gift tax exclusion. This year and next, a single person can give $14,000 to a child, grandchild, or any other person without gift tax consequences. Married couples can give $28,000, making the total gift and estate tax exclusion from your estate approximately $5.45 million for a single person and $10.91 million for married couples during their lifetime. The amount of these gifts are not added back to your estate upon death, and future appreciation on them is out of your estate.
Direct tuition payments for students get several breaks. Tuition payments don’t count against the $14,000 gift tax exclusion and they reduce the size of your taxable estate. You can put as much as $70,000 per child free of gift tax this year, or $140,000 for married couples, into a 529 plan to help your children or grandchildren through college. Also, these are income tax advantaged.
Give away appreciated assets to charity, such as stocks. When you give away appreciated assets, the appreciation escapes capital gains tax and in most cases you get a deduction for the full value of the asset, as long as you’ve owned it for more than a year. However, don’t donate an asset that has declined in value. If you do so, the capital loss is wasted. You are better off tax-wise selling the asset and donating the proceeds to a charity, for example.