There are many reasons to hire an estate planning attorney when you are concerned about the financial security of your loved ones. However, a reason that is arguably the most significant is the issue of estate taxes, and a specialist's inside knowledge on the best ways to navigate the system.
If you haven't asked your estate planning attorney about how tax-free gifts can best work to your advantage, now is the time to do so. A tax-free gift is one of the few options available to you to avoid the overwhelming federal estate tax, which is currently at 35%. (A qualified estate planning attorney can even tell you when taxable gifts make sense.)
There are several ways in which part of your estate can qualify as a tax-free gift. Listed below are some options that an estate planning attorney can help you set up:
• You can give up to $13,000 per year and per recipient starting January 1, 2009. This is still the amount as of June, 2011. This amount reduces the value of your estate, and therefore, the final estate tax that could be applied to your assets. This also allows you to enjoy watching your loved ones benefit from your gift.
• Paying someone's college tuition qualifies as a tax-free gift. If your estate planning includes an amount for a child or grandchild who wishes to attend college, paying or prepaying the tuition to the institution directly will ensure that this portion of your assets will not be assessed any estate tax. There is no cap on this gift.
• Paying someone's medical bills qualifies as a tax-free gift, and will not be assessed the estate tax. There is also no cap on this gift.
• Donating money to a charity of your choice qualifies as a tax-free gift, and will not be assessed the estate tax. This is true only if the charity holds a tax-exempt status. As long as the entity is tax exempt, you can gift any amount and it will be tax free. This type of gift can also lower your income taxes.
A qualified attorney will be able to discuss with you the ways in which you can allocate your assets to avoid as much state and federal taxation as possible. Your life's earnings and hard work should be spent on the things that you find most important, and the more that is left to your family and loved ones, the better. When you consider the effects of a 45% decrease in your total assets, it is worth looking into as many options as possible to keep the money in your family's hands.
Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at (661) 426-2499 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.