There are useful estate planning vehicles that take advantage of current historically high federal exemptions, while providing flexibility to adapt and modify those plans based upon future events or tax law changes.
Trusts are often associated with the rich, but the uber-wealthy are not the only people who can benefit from using trusts. There is no minimum asset level or net worth required to set up a trust, and you can put any amount of money into a trust.
In terms of federal tax law changes, the last year had much ado but little change.
Taxpayers should, of course, carefully consider whether to engage in a lifetime gifting strategy, which has other considerations beyond just estate taxes (such as the tradeoff with the ‘step‑up’ in basis, and non-tax family related considerations).
The new numbers mean that wealthy taxpayers can transfer more to their heirs tax free during life—or at death. A lot more.
A recipient of a gift does not pay income taxes on the gift. However, the gift-giver may pay gift taxes, unless one of two exemptions applies.
Inherited assets come with benefits, along with some burdens
Most of us associate 529 accounts as college savings vehicles. They’re flexible, allowing you to transfer assets to anyone, including yourself, for the express purpose of furthering the education of your beneficiary. However, did you know that a 529 can also be a powerful estate planning tool?
Every so often, it’s smart to methodically go through your estate planning documents and see if any tweaks are needed. Here’s a checklist to guide you through that mission.
Most people have heard that each individual is allowed to gift $15,000 per year to another person without paying a gift tax. However, exactly what the gift tax is, and the consequences of going beyond $15,000, are less clear.
