Showing posts tagged Trust and Wills

Think about this…

70% of people who receive an inheritance will spend it in its entirety, and 80% will do so within 2 years! (The Institute For Preparing Heirs)

How to Give Back-

If your parents are like mine, they worked late nights, woke up early hours and ensured I got an excellent education and never wanted for anything (I even loved my little Sentra they gave me at 16).  They did a great job raising me and I hope one day I can return the favor when they need it the most (both emotionally and monetarily).  This blog addresses the money side of that help. 
Arden Dale posted a new article, How to Help Parents Without Paying More Taxes, Smart Money, March 17, 2011.  He suggests ways that a couple can give gifts to their parents without paying taxes.  Some of the strategies include giving parents up to $52,000 a year, paying for their medical costs and making a home available for them.  
In the article GRATs Let Children Pass Millions to Mom or Granny Free of U.S. Gift Taxes, Bloomberg columnist Elizabeth Ody examines how grantor retained annuity trusts, or GRAT’s allow wealth children to gift large sums to their parents without triggering gift taxes or reduing their lifetime exemption. Low Interest Rates and a 10-year minimum term proposed by the Obama Administration make this an attractive time to consider GRATs as an estate planning tool.
The acronym GRAT stands for grantor retained annuity trust.  The grantor/donor transfers property into a trust (a GRAT) that provides that the grantor will receive each year a fixed annuity, usually for a term of years. At the end of the term, the remainder beneficiaries get whatever is left. The gift involved equals the theoretical value of the remainder, determined by using the discount rate (or rate of return) specified in IRC §7520.
Again, GRATS involve advanced tax planning so please contact me if you have additional questions -

Better to Give Than to Receive

For those of you with children, you know there is nothing better than giving your child a gift and seeing their face light up.  Having a comprehensive estate plan is place making sure your family is provided for is one of the best gifts you can give your children.  That is why in addition to a Living Trust and of course Guardianships, I offer my clients a couple additional trust options that can benefit their children.

2503 (c) Minor’s Trust

This trust enables clients to make completed gifts to beneficiaries under age 21 (irrespective of the exclusion for direct payments for education and medical costs).  A minor’s trust is often a powerful tool for clients who seek to gift property to underage beneficiaries but who don’t want to deal with the complexities of other irrevocable trust planning.  Minor’s trusts also provide a legal alternative to court appointed conservatorships/guardianships over minors who receive legal settlements.

Health and Education Exemption Trust (HEET)

This trust enables clients to make completed gifts to beneficiaries for qualified health or education expenses under 2503 (e).  Like the minor’s trust, gifts to HEETs are not limited to the annual exclusion amount.   HEETs are a good tool for parents or grandparents who don’t want to be limited to the annual exclusion gifts, don’t want the complexity of more sophisticated gifting plans, and don’t want to deal with the restrictions of strategies like 529 plans.  

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