Estate Planning for the Wealthy

estate planning

Estate Planning for the Wealthy

When was the last time you looked at your estate plan? If you can’t answer that question, either because it’s been so long that you can’t remember or because you still don’t have an estate plan in place, then you have some work to do. With the New Year almost here, now is a great time to take a closer look at your estate plan, or to start one, if you haven’t already. Estate planning is important for everyone, especially if you have a lot of wealth and you want to control what happens to it after you pass on. To that end, let’s take a look at some of the important tips to keep in mind for your estate plan.

Estate Tax Could Be Eliminated

Before we get started, there is one important factor to be aware of regarding estate planning and taxes. Now that Donald Trump has been elected president, there could be some changes coming to the estate tax laws: namely, he wants to eliminate the estate tax completely. Currently, any assets that exceed $5.45 million are taxed at a 40 percent rate for one’s beneficiaries. That money would be tax-free if Trump’s proposal is passed.

Remember Your Will

One of the first steps you should take is to draw up a will. That seems like a no- brainer, but the fact is nearly 70 percent of all adults in America as of November of last year did not have a will. Without a will, your estate will end up being divided in probate court and likely won’t end up where you intended.

What About Beneficiaries?

Of course, you get to choose who inherits your money, so make sure you choose wisely and specify which assets go to whom. It’s always a good idea to reevaluate your plan whenever a major life change occurs, such as a new child, a divorce or marriage or a death in the family.

Trust the Trust

Setting up a trust is always a good idea if you have a large estate. Having a trust, with a trustee, allows you to determine how your assets are used and protect them from being abused or misused after you’re gone. There are several types of trusts, but permanent or irrevocable trusts usually provide the most tax benefits. However, when you place assets in such a trust they become the property of the trust, which means they are not subject to estate taxes.

Consider a Roth IRA

Another smart move for many people is to convert a traditional IRA to a Roth IRA. The money from a traditional IRA is taxable if it’s transferred to anyone other than your spouse. However, you can avoid this by slowly converting traditional IRA accounts to Roth IRA accounts.

Give it Away Before You’re Gone

One of the best ways to protect your money and other assets is to give it away before you pass away. You can give away up to $14,000 per person in gifts every year. Those gifts will decrease the value of your estate and they are tax-free for the recipients. You can also donate your assets to charitable causes, which also provides a nice tax break. For more estate planning ideas to protect your wealth contact GROCO for help.

Follow GROCO on Facebook

Posted in

Benefits of Miscellaneous Deductions

Benefits of Miscellaneous Deductions Source: IRS.gov If you are able to itemize your deductions on your tax return instead of claiming the standard deduction, you may be able to claim certain miscellaneous deductions. A tax deduction reduces the amount of your taxable income and generally reduces the amount of taxes you may have to pay.…

Organizing Tax Records This Summer Can Help You Keep Your Cool

Organizing Tax Records This Summer Can Help You Keep Your Cool Source: IRS.gov If the sweltering dog days of summer aren’t incentive enough to get out of the sun for awhile, here is another reason to head indoors: organizing your tax records. Devoting some time mid-year to putting your tax-related documents in order may not…

Crazy Tax Deductions

Crazy Tax Deductions Every year at tax time, people try to come up with items to deduct or write off on their tax return. Sometimes the IRS allows them, and sometimes they don’t. We’ve compiled a list of our favorite crazy tax deductions, some were successful and others were not. Crazy Tax Deductions that the…

Renting Your Vacation Home

Renting Your Vacation Home Source: IRS.gov Income that you receive for the rental of your vacation home must generally be reported on your federal income tax return. However, if you rent the property for only a short time each year, you may not be required to report the rental income. The IRS offers these tips…