Inheritance tips
By Mindy Fetterman, USA TODAY
Financial planners, estate planners and other experts often quote this statistic: 70% of all inheritances are fritteredpatagonia store quebec3 away in the first three years. Here are some things to consider if you plan to leave an inheritance or expect to get one:
Even if you don t have a huge estate, there are ways you can leave money to your family or others that can save you taxes and make a big difference in their lives. Many people give money while they re alive to reduce the size of their estates and estate taxes.
can give some money each year.
Each person can give $12,000 a year to any person a child, another relative or the milkman without hpatagonia better sweater cables jacketaving to file a gift tax return with the IRS. If you have several children, you can give $12,000 a year to each. A married couple can bundle their gifts to give a combined $24,000 to each child ($12,000 per spouse).
Over your lifetime, $1 million in gifts is excluded from gift taxes. But any amount you give over $12,000 to one person counts toward that $1 million.
Time gifts for impactpatagonia store quebec: For instance, a married couple could give a child $24,000 in December and $24,000 in January, says Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, Calif. That s a good chunk of a down payment for a house, he says.
can bequeath money after death.
Each person also has a one time exclusion of $2 million from estate taxes after they die (the $1 million above is part of this). Combined, a married couple has $4 million that s excpatagonia backcountry guide pants greyluded from estate taxes. If you want your heirs to be able to take advantage of the growth in assets you give them and you re not sure they d invest it wisely themselves you can set up a trust to hold onto the money for any period opatagonia store quebec2f time.
STORY: Giving while living alters inheritances
If you leave $1 million using a will, the money would be paid soon after your death. By contrast, if you left it in a trust, it could grow to $2 million over time, doubling the amount your child could inherit without triggering estate taxes.
The $2 million exclusion is a use it or lose it provision, says Richard Stone, CEO of Salient Wealth, a wealth management firm in San Rafael, Calif.
can pay for education.
If you want to pay education costs for your chipatagonia women's simple guide hoody tailored grey 83766ldren, grandchildren or anyone else, you can fund a 529 plan or prepaid college fund. Money in such funds grows tax free over time, and the proceeds are free orare patagonia large 19016 special forces mars slingshot jacket alpha greenf taxes as long as the money is usepatagonia store quebec0d to pay for education expenses.
You can make the maximum $12,000 per person, per year gift to a 529 plan, or front load your gifts by putting five years of donations in at once.
You can t make another gift for five years, but it means Grandpa and Grandma can give $120,000 upfront, Stone says. That money also comes right out of their estate, so no estate taxes are owed on it after they die. The student gets the gift tax free.
You can pay for education or medical expenses outright as long as you write a check directly to the college or medical institution.
Don t give it patagonia discount code godaddyfirst to the student or her parents. The check has to go to the school.
can set up a trust.
A trustpatagonia store quebec1 is a way to bequeath money to your heirs beyond using a will. Families with as little as $300,000 to leave should consider a trust for their estate, Yoshikami suggests. That s enough money to make it worthwhile to pay the fees to set it up. Once life insurance, retirement savings and the rising value of real estate are combined, he says, many people have estates worth that much.
One advantage to a trust: It doesn t have to pass through probate court, as a will does. The amount and details of the trust don t become public, says Stone of Salient Wealth. And money or property in a trust stays with the intended person. It can t, for example, be mingled with other assets and divided in a divorce.
A lot of families use them to protect money against creditors or a bad marriage, Stone says.
A trust isn t always for everything in your estate. Leaving an IRA in a trust, Yoshikami says, doesn t give the same tax advantages that leaving it to an individual dopatagonia guide jacket junctiones. If you leave an IRA to an individual, they can choose to take the payout over years and earn more over time, he says.
There are many kinds of trusts, and tax implications, to consider. You should have a trust attorney or financial adviser help you decide which is best for you.
can open a private foundation.
There s just something about the sound of patagonia guide pants keep The Eric L. Green Foundation, lpatagonia guide pants namesaughs Eric L. Green, an estate attorney at Convicer Percy of Glastonbury, Conn.
Green says some families with as little as $500,000 extra after retirement, college and lifestyle needs are met set up a foundation to support a charity.
You can pay your child a salary to run the foundation, he says, or pay him to serve on the board. A foundation has to disperse only 5% of its assetpatagonia messenger bag instructionss each year.
