Month: November 2010

Great Gifts in 2010

It’s not too late yet.  For many wealthy parents, grandparents or business owners, giving lifetime gifts is a valuable way to decrease your taxable estate.  And 2010 is a great year to give those planned lifetime gifts.

Generally speaking, properly planned lifetime gifts can help lower your taxable estate over the course of years, so that your assets are distributed to whom you want with less going to the tax man.  Each year, you can give gifts of a certain amount to other individuals without having to pay gift tax.  In 2010, for instance, you may give up to $13,000 (or $26,000 if you give as a married couple) to other individuals.  If you have two nephews, you could give each $13,000 without tax.  You could give another gift of a similar amount next year to the same individual, and so on through the years.

Many individuals want to give more than the allowed annual amount.  If you fall into this category, it is important to talk to a professional who understands the intricacies of gift taxation before making large gifts.  If you are thinking about larger planned gifts, there is still a small window in 2010 to complete the gift. And it is a great year to do it.

Why?  At least three reasons.  First, at 35%, the current gift tax rate is the lowest it’s been since the 1930’s.  Second, when the 2011 bell tolls, there are sure to be a myriad of tax changes, and one of the expected changes is that the gift tax will rise to 55%.  For those giving large gifts, a 20% increase is quite a hit.  Third, the values of many key assets are still depressed.  If you gift those assets now, there will be less there to tax than if they were significantly appreciated.

All in all, by giving a gift in 2010 with a depressed asset, you can potentially save on the value of the gift while being taxed at historically low rates.  While no one can predict the future, the gifting climate is excellent for persons with the right assets.

Zen and the Art of Estate Planning

Physical health and peace of mind work together for a reason.

Defying long odds in modern society, we continue to better our heath, wealth and, often consequently, our peace of mind.

The hope, of course, is to have good habits pay off. By passing over the doughnut (most days) for an orange, we come to expect the Vitamin C to keep us running strong. Many of us have learned to do a few exercises before turning on the television soap opera. These decisions keep us happier and stronger. They also help us live longer to see our children and grandchildren grow and succeed.

It doesn’t stop with physical well-being. That nest egg you have created in your home or other investments have given you options that our ancestors could never fathom. These assets will hopefully grow despite numerous dips and will certainly allow more options to you and loved ones.

Unfortunately, despite our best efforts, our physical bodies don’t last forever. No, eventually the Vitamin C runs out.

But our children and grandchildren live on. And the assets that we nurtured can continue to grow with them. When we are pulled away to our higher and better place, we want assurance that we have properly passed our legacy to our loved ones rather than Uncle Sam or other undeserving relatives.

Zen is achieved by having your things passed to those who will value them the most and that isn’t the government. Complete peace, health and security can only be achieved by ensuring that you are prepared for the future.

Everyone asks the question, “What will happen to everything accumulated in life?” The answer is: “Whatever is written in your will or trust.”

When did you last review and update your will or trust? If you are forced to think back over years, or worse, have not yet worked with someone to create your plan, read on.

A plan made for you

Estate planning is for everyone. It is not a mechanism for the uber-rich. Estate planning is the process of documenting your wishes so that when you become incapacitated or pass on, your loved ones will know how you wanted things to be handled. It includes instructions on how to distribute and protect your assets but it also passes on peace of mind to your loved ones.

You have worked hard to live a healthy, active lifestyle by making the right decisions. It is only fitting to pass on those decisions as instructions. Explain things like: (1) who should make medical or financial decisions on your behalf, (2) declaring a guardian for your minor children, and (3) how you want to provide for your loved ones and protect what you have earned.

Each individual has different needs and wishes, and so it is important to have an estate plan tailored to you. Some individuals are concerned with the cost or publicity of the probate process and choose a Living Trust. Others have specific wishes on how and when their children and grandchildren should receive assets.

The options are endless and even simple needs require careful attention to changing state and federal laws. While Internet “wills” might seem attractive, the only way to truly protect your wishes is to work with an attorney familiar with the complexities of estate planning.

As we enter 2011, the death tax will likely be reinstated. That means many relatively modest estates could be surprised with high tax rates. Without planning, children could find that a significant portion of their inheritance transferred to Uncle Sam’s coffers instead of their own.

Have you updated your estate plan in the past five years to account for changing laws? If not, consider setting up an appointment now with a knowledgeable estate planning attorney. A simple consultation can help secure the peace of mind so important to a healthy life, for you and those who follow you.