How do I reduce the value of my taxable estate?
- Gift assets during your lifetime instead of waiting to give it as part of your estate after your death.
Why should I reduce the value of my taxable estate?
- It immediately reduces the value of your taxable estate by the amount of the gift while also ensuring that future appreciated value of the asset does not become part of your estate.
When should I reduce the value of my taxable estate?
- Taking full advantage of the current amount of the estate and gift tax exemption allows for estate tax savings that may not be available five years from now, particularly in light of our record-high budget deficit which will eventually need to be paid down through tax revenues. Loss of the enhanced estate tax exemption at the end of 2025 could cause your estate to pay more taxes than had you gifted away part of it.
How can I overcome my concerns of how the recipient will handle the gift?
- It is perfectly understandable to have reservations about the ability of the recipient of a gift not to squander or mismanage it. An irrevocable trust may offer a sound alternative to an outright gift. And, certain irrevocable trusts can provide income to you, your spouse, your children and/or your grandchildren whilst still removing the assets from your “estate”.
How can an irrevocable trust help reduce the taxable value of my estate?
- When a gift is made via an irrevocable trust for the benefit of charities or to your loved ones, you have peace of mind knowing the assets are managed by a trustee for their immediate and long term benefits. An estate planning attorney can offer advice and guidance about creating an irrevocable trust to take full advantage of the current estate and gift tax exemption and can even set up certain trusts to provide income to one class of people and distributions of principal to another class.
Can I delay addressing the tax concerns of my estate?
- If you delay, then you run the risk of encountering even bigger problems down the road. The more and the earlier you prepare, the more you’ll thank yourself for taking the time to seek counsel on complex tax aspects of planning your estate.
Disclaimer: This article is intended to provide a general summary of laws in the State of California and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. Noelle Minto is an attorney at NM Law, APC in Tustin, California, a law firm specializing in Trusts & Estates and Business Transactions.