Give While You Live

9:34 am Uncategorized

Estate planners know that the best time to give a gift is while you are still living.  Here are some gift ideas for the beneficiaries on your list:

Dynasty trusts — also known as generation-skipping trusts — are long-term trusts that are created to benefit generations of descendants; in fact, some can last as long as a century.  A dynasty trust allows assets to accumulate for years free from federal gift and estate taxes.

While the dynasty trust is in force, distributions can be made to the benefactor and his or her heirs with no federal taxes due.  Since estate taxes are applied to each generation, the savings can be tremendous over multiple generations.

A Grantor Retained Annuity Trust (GRAT) is a trust instrument that allows you to contribute assets while retaining a stream of annuity payments over a number of years.  One of its benefits is that a GRAT can be structured so that no gift tax is due on creation.

The 529 Plan was created to help families save for college, it can also help you protect assets and lower your tax bills.  And anyone can donate to it.  Here’s what you need to know:

When it comes to taxes, any contribution to a 529 plan is treated the same as a cash gift.  However, you can give more at one time without triggering the gift tax.  Individuals can put up to $65,000 in a 529 plan in one year; a married couple can contribute double, or $130,000. The IRS treats either donation amount as if it were given over a five-year period instead of just one year.

Charitable trusts allow you to give and receive.  Benefits of a charitable trust include:

  • You can take an income tax deduction for the value of your charitable gift over the next five years.
  • Upon your death, the trust property goes to the charity – since it is no longer a part of your estate, it is not subject to estate taxes.
  • Appreciated property can be turned into cash without paying capital gains tax on the profit.
  • You can receive income from the trust during your lifetime, via either a fixed annuity or as a percentage of the trust assets.

Give yourself the gift of a good estate plan by contacting our California estate planning law firm.

Help is available to you by contacting your Southern California financial planning experts today.

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