Estate Planning
An estate plan can facilitate the transfer of assets to your beneficiaries, reduce taxes on your estate and provide support for your family or a charitable cause. The first step is to create a Will.
Wills
The purpose of a Will is to:
- document your wishes regarding the distribution of your assets
- name an executor or representative who will oversee your estate’s administration
- appoint a guardian for children under the age of majority
Testamentary Trusts
You may also wish to consider a testamentary trust. A trust is a legal arrangement specifying one or more individuals as trustees who will manage assets for the benefit of someone else. You appoint the trustees, establish the terms of how you wish for the assets to be managed, and for whose benefit. A testamentary trust is a trust created within a will. It can be used to:
- Provide your family with asset management services
- Reduce estate taxes on both your and your spouse’s estates
- Provide your spouse with a lifetime income and ensure your children
will receive your assets upon the death of your spouse
Lifetime Gifts
Another estate planning consideration is the use of lifetime gifts, which can provide for the transfer of property to family and friends during your lifetime without incurring gift taxes.1 A carefully crafted lifetime gifts program can help reduce the amount of assets that will be subject to estate taxes.
Charitable Remainder Trusts
Charitable Remainder Trusts are arrangements in which assets are gifted to a charity, but the grantor (donor) or another designated beneficiary (i.e. a spouse or other family member) continues to use or draw income from the assets for a specified period of time. Once the term of the trust ends, the remaining assets transfer to the charity.
In addition to providing support to a qualified charitable organization, this strategy can offer the following benefits:
- Reduces your current federal income taxes by providing what may be
a sizeable income tax deduction
- Eliminates immediate capital gains taxes on the sale of appreciated assets
- Removes the assets from your estate thereby reducing estate taxes
- Provides income for life or a specified time period (typically 10 to 20 years)
for you or another non-charitable beneficiary
While wills and trusts can serve as the cornerstones of your strategy, there are additional considerations when preparing a comprehensive estate plan. Other tools that are commonly utilized include:
- Life insurance
- Durable power of attorney – A durable power of attorney is a legal document that enables a specified person to act on your behalf. You can select the responsibilities or powers you want this person to have. The powers granted by a durable power of attorney begin when you sign the document and stay in effect for your entire lifetime unless you cancel it. A durable power of attorney can help ensure that a capable individual of your choosing will have the authority to manage your affairs if you become disabled or incapacitated.
1 In 2009, individuals may give up to $13,000 in assets to any number of people without triggering gift taxes while married couples may give up to $26,000.
Legend Equities Corporation and its affiliates do not provide tax, legal or estate planning information or advice. For specific concerns regarding your situation, please contact your tax advisor and/or attorney.