ADVANCED ESTATE PLANNING

 

You're financially independent and you know it. Now what?

 

Provided by Gregory M. Montagna, CPA, CFP

 

Think you're all set? If you've made wise decisions with your money, set aside plenty and feel like you're ready to retire … you're one step ahead of many Americans. If you've planned your estate (arranged how your money and assets will transfer after your lifetime), then you're even further ahead. But have you considered everything?

 

Reducing taxes … The transfer of assets can trigger different types of taxes: income tax, estate tax, capital gains tax, generation-skipping transfer tax and gift tax. Have you considered how these taxes could affect the amount you'll leave behind for loved ones? It's wise to keep up with estate tax laws, because they constantly change. The following are just a few examples of things you ought to consider …

           

Unified Credit … Estates that exceed a certain value (exclusion amount) may be subject to the Federal Estate Tax. But have you heard of the unified credit against estate tax? Basically, this means you can leave an amount that does not exceed the exclusion amount (currently $1 Million*) to anyone you choose … federal estate tax free. If you are married, you can leave an unlimited amount to your spouse, tax-free.  But … are you using the unified credit to your advantage?

 

For married couples, a little reorganization can help you attain the utmost value for this credit. Also worth considering could be a credit shelter trust, which can help maximize the value of the unified credit.

 

Gifting … For those with taxable estates, gifting can be an important tool. While many choose to transfer estates after their death, consider transferring assets while you are alive. Did you know that married couples can gift an unlimited amount to one another, gift tax-free, as provided by the unlimited marital deduction provision in the federal gift tax law? They can also gift a certain amount, gift tax-free, to anyone of their choosing each year. This annual benefit expires if you do not use it in the current year.

 

There are other ways of tax-free gifting, too … including tuition paid directly to an educational institution or amounts paid to an approved non-profit institution. By taking advantage of these and other gifting options, you could potentially increase the value of what you're giving while decreasing your taxable estate.

 

Trusts … A well-written trust could help your heirs to avoid the probate process, thereby potentially saving them money. Did you know that your heirs may need to file a petition to probate your estate … even if you have a will?  However, if a living trust has been prepared and funded properly, your heirs could avoid probate.

 

You may also want to consider a dynasty trust, which is a long-term trust created to benefit future generations. Dynasty trusts can have huge tax-saving potential (in the long run).

 

Other areas to consider … Have you thought about charitable remainder trusts? Life insurance replacement? Business succession? Investigating these topics may reveal ways to save taxes and retain more of your hard-earned wealth.

 

If you haven't yet looked into any of the items I've mentioned here, it's probably in your best interest to speak with a qualified professional about advanced estate planning. It can definitely and positively impact your financial legacy.

 

Gregory M. Montagna, CPA, CFP is a Representative with 1st Global Advisors and may be reached at www.montagnainc.com, (949) 833-2371 or greg@montagnainc.com.

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

Securities offered through 1st Global Capital Corp., Member NASD/SIPC