The marital deduction allows transfers between spouses, during lifetime or at death, that do not incur transfer taxes as long as the spouse is a U.S. citizen. Using a marital deduction, however, does not eliminate transfer taxation, it simply defers it. Careful planning can help you avoid the shifting of assets into a higher transfer tax bracket. The charitable deduction lets you make transfers to qualified charities, providing a deduction from the estate and gift transfer tax system. Techniques are available that combine the tax advantages of charitable giving with the natural desire to provide for family members.
Life insurance is subject to a special rule for property transfers.
If a person gives away a life insurance policy, he or she must live three years after the transfer has been made. Business valuation A company's value is often a tax challenge between the IRS and business owners. The IRS obviously wants to set your company's value as high as possible to generate the highest tax revenue. You can anticipate this situation by estimating now, within your succession plan, a bona fide value of your company. You can determine your company's fair market value by doing market value research through your financial advisor or, for larger companies, hiring an independent appraiser.