The goal of estate planning is to pass on to the next generations the maximum amount of your hard-earned money, by keeping the amount paid to the US Government in the form of taxes at a minimum, and still providing for a comfortable and secure retirement. If you think you might have an estate tax problem (which could occur with an estate valued at $5,340,000), you should certainly seek professional help. Estate taxation can be extremely complicated, with many traps that can become very expensive.
The longer you wait before seeking professional advice, the more difficult it will be to avoid estate taxes. Started early enough, many quite substantial estates can be transferred tax-free using the annual gift exclusion of $14,000 ($28,000 if married) per recipient, particularly if there are a number of children and grandchildren alive. Of course, in many instances it would be inadvisable to give money outright, particularly to younger children and grandchildren, so in these instances it is important to give the money indirectly through trusts. Trusts can be set up in a nearly infinite number of ways to achieve the exact goals that you want, including access to the income for as long as you live.
Another consideration that can save taxes is giving money away to your favorite charity. Most of us would rather see our money go to a charitable organization of our choice than go to the US Government in the form of taxes. Again, outright gifts may not be the best answer. Instead, by using a variety of charitable remainder trusts you can receive a current deduction while still receiving the trust income during your lifetime.
If you have been putting off estate planning because you did not know who you could trust to give good advice, consider LG&H. We have helped many others reach their estate planning goals.
- Maximize tax free gifts
- Advice in use of trusts to minimize taxes
- Advice on charitable remainder trusts and private foundations