Giving to charitable causes and institutions can be quite rewarding when you are devising your legacy plan. If you are in a position to do so, you could engage in philanthropic acts that benefit worthy nonprofit organizations. There are various different ways that you can support charities, and one possibility is the creation of a private charitable foundation. When you think about private foundations, you may immediately flash upon the foundations that have been established by some of the … [Read more...] about What Is a CLAT?
Taxes
Estate Tax Can Loom Large for Farmers and Ranchers
An inventory of your assets will be called for when you get serious about your estate planning efforts. Clearly, you want to identify what you have to pass along to your loved ones when you are devising your plan, but there is another relevant factor. The federal estate tax can be applicable when assets are being transferred after someone dies. This tax carries a maximum rate of 40 percent, so we are talking about a very significant level of asset erosion. Everyone does not pay the estate … [Read more...] about Estate Tax Can Loom Large for Farmers and Ranchers
Annual Gift Tax Exclusion Will Stay the Same in 2016
When you give someone a cash gift, you are passing along money that you have left after you paid your taxes. It would be logical to assume that you can give gifts without any further tax consequences, but in reality, there is a gift tax in place. Fortunately, the tax is not a factor for most people, because there are exclusions that can be used to give a certain amount in a tax-free manner. One of these is the annual gift tax exclusion. This exclusion allows you to give a certain amount to … [Read more...] about Annual Gift Tax Exclusion Will Stay the Same in 2016
Can My Surviving Spouse Use My Estate Tax Exclusion?
The estate tax exclusion or exemption is the amount that can be transferred before the estate tax would be applied. There is no tax on asset transfers between citizen spouses, but you would have to use a portion of your estate tax exclusion to leave tax-free inheritances to others. In 2016, the estate tax exclusion will be $5.45 million after the Internal Revenue Service applies an inflation adjustment. This represents a $20,000 increase over the 2015 exclusion. Portability A … [Read more...] about Can My Surviving Spouse Use My Estate Tax Exclusion?
Slight Estate Tax Exclusion Adjustment Added for 2016
The federal estate tax can be a factor for you if you will be transferring a significant amount of wealth to your loved ones. This tax is only a factor for high net worth individuals because there is a credit or exclusion that is relatively high. The exclusion is the amount that you can transfer tax-free. Any portion of your estate that exceeds the amount of this exclusion can be subject to taxation. Before we proceed, we should point out the fact that there is an unlimited marital deduction. … [Read more...] about Slight Estate Tax Exclusion Adjustment Added for 2016
What Is a Stretch IRA?
When you are looking ahead toward your senior years, you may contribute into an individual retirement account. An IRA can definitely help you accumulate a nest egg that you can draw from during retirement. However, an individual retirement account can also be part of your estate plan under certain circumstances. There is a concept called the stretch IRA that can be of value when you are planning your estate. Before we look at the stretch IRA, we will provide some general information about … [Read more...] about What Is a Stretch IRA?
An Estate Tax Strategy for Appreciable Assets
They say that you should use the right tool for the right job, and this old saying applies to the field of estate planning. There are numerous different asset transfer vehicles in the estate planning toolkit, and you can optimize your position if you make the right choices. Estate tax efficiency is something that is very important for high net worth families. The federal death tax comes with a 40 percent rate that can take a huge bite out of your legacy. If you are married to an American … [Read more...] about An Estate Tax Strategy for Appreciable Assets
Is an Inheritance Taxable Income?
When you are thinking about the position that your loved ones will be left in after you are gone, you would naturally wonder about taxation. Will your family members be forced to report their inheritances as taxable income? A simple answer to this question is no. An inheritance is not considered to be taxable income, but there are a number of things that you should take into consideration beyond this simple fact. Let's look at a few of them. Appreciated Assets The capital gains tax can … [Read more...] about Is an Inheritance Taxable Income?
Are Life Insurance Proceeds Subject to the Estate Tax?
If you are in possession of a considerable store of wealth, you should be well aware of the potential impact of the federal estate tax. Here in Indiana we do not have a state-level estate tax to contend with, but the federal death tax looms large for high net worth families. Asset transfers to your spouse (assuming your spouse is an American citizen) are not taxable under any circumstances, but transfers to anyone else, even your children, are potentially subject to taxation. The first $5.43 … [Read more...] about Are Life Insurance Proceeds Subject to the Estate Tax?
Do Assets in a Living Trust Get a Step-Up in Basis?
A revocable living trust is an estate planning tool that provides certain benefits, but things essentially stay the same when you convey assets into this type of trust. The trust creator is called the grantor of the trust, and the trustee is the trust administrator. The grantor will typically act as the trustee throughout his or her life. If you create this type of trust, you still control the assets that you conveyed into the trust. You are retaining incidents of ownership in legal … [Read more...] about Do Assets in a Living Trust Get a Step-Up in Basis?
