Your Estate Plan: Keep it CurrentApril 9, 2019
5 Ways to Fight Murphy’s Law in your Estate PlanningApril 9, 2019
The saying goes “It is better to give than to receive.” I would take this saying a step further and say it is better to give right than give wrong. If you have reached a time in your life when you have acquired enough wealth, you (at least according to Scott Adams) naturally turn outward to look at the world around you to see how you can give back. Studies have shown that the only way that wealth can bring real happiness is not to spend it but give it away. In that mind set, I would like to present you with 5 ways that can gift right.
- Make a foundation or give to a charity: This is usually what you think of when you think of gifting right. Gifts to a charity are tax deductible. If you do not want to give away huge amounts you can investigate a special account called a “Donor-advised fund.” Which operates like a savings account for a specific charity. Money in these types of accounts can be invested tax free. If you have a sizeable asset that you will be selling and realizing a lot of capital gains tax, it may be a win-win for you and a charity of your choice if you create a charitable trust. There are different types of trusts that can help you avoid paying capital gains taxes and can help you benefit the charity of your choice at the same time. If this is something of interest to you, you should seek the advice of a legal professional. Depending on tax laws at the time of creation, it may be beneficial to use one form over another and this choice should be made by a professional.
- Tuition for College: A 529 College Savings Plan is a great way to give to your next generation or the generation after that. This money grows without tax and can be withdrawn for qualified educational expenses. If this is something that is interesting to you, make sure to engage the help of a professional. There are certain limitations in the way that 529 funds can be invested, and you should go in with your eyes wide open to all options when providing for college funds for children or grandchildren. If you are interested in getting recommendations on a financial professional that can help you with this, please give our office a call. We cannot provide these services for you but work with many professionals who can.
- Gift an unused vehicle: If you are gifting a vehicle that has little value (under $15,000), gift away. Otherwise, these types of vehicle gifts can result in gift tax. You may choose to gift these vehicles to a charity without any fear of adverse tax consequences, but if you are gifting a vehicle to a family member and it has significant value, you should seek professional help. An estate planning attorney in your area should be able to answer these questions for you.
- Gift the family vacation home: I often have clients with property on a lake, oceanside, or a cabin in the mountains that want to preserve this home even after they have passed for the benefit of their family for generations. First, make sure this is something the next generation really wants. If it is, you can create an LLC to hold the property in a way that gives rights and responsibilities to the whole family. If this is something that interests you, this should be done with the help of an attorney.
- Gifts to the Disabled family member: Treating unequals equally is inherently unequal. What I mean is that often there is a disabled family member who may need more assistance than other family members who are physically or mentally more capable. Setting up gifts to the less fortunate in our families is a weighty topic. This must be done in a way that does not disqualify the disabled individual from qualifying for government assistance. A special needs trust may be the right way for you to gift to these members of your family.
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If any of these methods of gifting have peaked your interest, please call us for more information at (951)304-3431.