Losing a family member is always hard. Also losing a big portion of your estate or inheritance to taxes makes the hard time even worse! Thankfully, not all “death taxes” (taxes placed on money or property gained when a family member dies) are equal, and there are some ways to avoid at least some of the taxes on inheritance.

Use an irrevocable living trust

Living trusts are another way to leave things to your family beyond inheritances or estates. They are a little more complicated but can be safe from a lot of taxes. This is especially true in the case of an “irrevocable” living trust. This type of trust is designed to continue on its own after the original owner’s death and is not included in their estate for tax purposes.

Give early

Instead of leaving your entire fortune to your beneficiaries when you pass on, consider giving some to them earlier. The federal government allows giving up to $15,000 a year without having to pay taxes. This allows you to give money to your family early, lowering the total on the estate or inheritance you leave behind, which means lower potential taxes on it.

Properties and gains

Leaving a home to your children is a wonderful gift, but some ways of doing so are better than others. If they decide to sell the home, they may end up paying a significant amount in capital gains taxes. One way to minimize this is setting a valuation date for the property, another is to leave the property in a living trust rather than simply giving it to a beneficiary.

Inheriting retirement accounts

Leaving your retirement acunt to a beneficiary can have vastly different taxes, depending upon how they were related to you. Most beneficiaries are required to start taking distributions from the account soon after your death, which is considered taxable income for them. If you leave the account to your spouse, however, they can take it over and make it grow until mandatory retirement age.

Know your state taxes

Thankfully, many of the states in the US do not impose a state-level inheritance or estate tax. Only six states currently have an inheritance tax: New Jersey, Maryland, Pennsylvania, Nebraska, Kentucky, and Iowa. There are 12 states that impose an estate tax: Massachusetts, Oregon, Hawaii, Maryland, New York, Vermont, Maine, Washington, Rhode Island, Connecticut, Illinois, and Minnesota.