If you have already created an estate plan, you’ve likely set up your wills, trusts, and powers of attorney. Most people don’t need additional documents and can rely on these simple tools to protect their estate and legacy after death. However, if you have a particularly large or complex estate, it may be in your best interest to look into advanced estate planning.
Advanced estate planning is a set of tools that take advantage of tax laws to minimize your tax liability while maximizing the ability to achieve your financial goals. There are many advanced estate planning tools available, and not all of them may be needed for your particular estate. If you would like to look into advanced estate planning, contact The Singh Law Firm today. Our experienced team will review your estate and make recommendations based on your goals and your current finances. To receive a free consultation, call us today at 510-901-5375.
When creating your estate plan, you can use specific estate planning tools to give money to charity while preserving your wealth. Charitable contributions are deducted from your income taxes, and in most cases, they are not subject to gift taxes or estate taxes. There are several ways you can donate money to charity while still preserving enough wealth to pass down to your family.
Common estate planning tools for this method include:
A charitable remainder trust is created while you are still alive, and either you or the named beneficiaries receive benefits from it. Once the beneficial period is over, anything left in that trust gets donated to charity. You will receive a tax deduction for the present value of the remainder, and the assets in the trust will not be included in your taxable estate.
A charitable lead trust is created and pays any current income to charity. Any balance remaining after a certain period is then paid out to your named beneficiaries. Charitable lead trusts are irrevocable, meaning they are not part of your estate and cannot be taxed. However, they may be subject to a gift tax.
An annuity contract allows you to give assets to a charity as a gift. In turn, the charity agrees to pay you a certain amount of money for a set period of time. An annuity is beneficial because it removes assets from your estate, lowering your overall tax liability.
Donor advised funds, also called DAFs, allow you to donate money to charity while keeping it in a separate account. You or others you designate can advise the charity on how the funds should be used. This removes the money from your estate while still giving you some control over its use.
If you have a large estate or would like to leave money to your future generations, simple estate planning tools might not cut it. Leaving money to your children is easy, but designating money for grandchildren or beyond can be difficult. Fortunately, there are advanced estate planning tools that can help you.
The best way to leave money to future generations is below:
As its name suggests, a generation-skipping trust leaves assets to your grandchildren instead of your children. You can put assets and money into a generation-skipping trust to leave money to your grandchildren or great-grandchildren. However, the government does require a Generation Skipping Transfer Tax, or GST tax, to be paid. If you’d like to know whether this trust is right for you, contact our law office today for more information.
Giving gifts to family members is a notable way to pass down your wealth. However, with gift taxes and estate taxes, many individuals find it challenging to gift large sums of money to family without losing it to taxes. An advanced estate planning tool can help you shrink an asset’s value before gifting and then inflate it again after it is received.
The best way to boost the value of your gifts is the following:
In a family limited partnership, you can pass valuable assets like investment accounts and business interests to family members at a discounted rate. This allows you to give family members gifts below the taxable rate, meaning they will not be subject to gift tax. There are several ways to do this, including using a limited partnership structure or the lack of marketability interest. If you would like to learn more about gifting money to family members, contact our law office today for more information.
Estate planning is the best way to protect your family members and preserve your wealth even after you’re gone. For large or complicated estate plans, basic estate planning tools might not be enough to reach your financial goals. By using advanced estate planning tools, you can give money to charity, leave money to future generations, and give gifts to family members, all while lowering your tax liability. Not all advanced estate planning tools are suitable for every estate, so it is essential to consult an estate planning lawyer before making any decisions.
At The Singh Law Firm, our team of attorneys has years of experience advising clients on creating their estate plans to meet their goals. Whether you are just a few years away from retirement or just starting to develop your estate plan, we are confident that we can help you. To receive a free consultation and learn more about our services, call our law office today at 510-901-5375.