Estate planning: Most vital gift of all

September 22nd, 2009

Planning your estate is an important part of ensuring the financial security of your loved ones. One of the most common tools used in estate planning — and one that everyone should at least give careful consideration to — is a program of giving gifts.

Preparing for one’s death is not a pleasant task — which may account for why an estimated 70 percent of Americans don’t have wills — but it is critical to have an estate plan to ensure your assets are distributed according to your wishes. Furthermore, not having a will can subject your estate to unnecessary taxation and your heirs to undesired legal and financial entanglements.

However, a carefully planned gift-giving program can reduce the amount of your estate that is subject to tax while still passing on wealth.

While large gifts are subject to gift taxation, you can give away up to $13,000 in 2009 per recipient per year free of gift tax. These gifts also do not reduce the amount that you can pass free of gift tax ($1 million lifetime exclusion, adjusted for inflation each year; $2 million if gifts are “split” with a spouse).

There is a great deal of flexibility in the types of property that can be transferred. Gifts that qualify for the $13,000 annual exclusion can be made in money, property such as stocks or bonds, or even a life insurance policy, as long as the recipient gets the present right to possess or use the property. The gift may be in trust if the terms of the trust give the recipient the immediate right to the property or income from the property.

You can give up to $26,000 in 2009 per recipient per year if you’re married and your spouse consents to “split” your gifts. This is useful for spouses who do not own an equal amount of property. The spouse with less property can consent to gifts made by the wealthier spouse, thereby effectively doubling the amount that the wealthier spouse can give away tax-free.

One important thing to remember when you make a gift is that the recipient must take your basis in the property. This means that if the recipient sells the property, any gain on the sale will be measured by what your tax basis was in the property, not what the property was worth when he received it. In contrast, if property is transferred to another person through your estate, the recipient can use the value of the property at that time in measuring any gain on the sale of the property.

Another way to further the financial security of others without incurring gift tax is by payment of medical and educational expenses. You can pay an unlimited amount for these expenses tax-free as long as the payments are made directly to the medical services provider or educational institution. The person you benefit does not need to qualify as a dependent for tax purposes. Any medical expenses, however, must not be reimbursed by insurance, to either you or to the beneficiary.

If used properly, a program of gift-giving can benefit everyone involved.
Source: The Tax Strategist

Next Generation Seminar

September 15th, 2009

We are scheduling a 2nd session of the Next Generation class for anyone who is a participant (or considering being a participant) in the McDonald’s next generation program.  We will review the next generation planning process; help you better understand your financial statements and your financial position; talk about how to set up an effective and efficient back office system; discuss options for business structure; and, cover some tax planning ideas.  We will also leave plenty of time for your questions.

Class size for the seminar is limited to six people in order to make it as personal as possible. The cost of the seminar is $100 with the proceeds being donated to the Atlanta Ronald McDonald House Capital Campaign. Our receipt of your check (made payable to Atlanta Ronald McDonald House Charities) will confirm your reservation. The seminar will begin at 9 a.m. and finish no later than 4 p.m.

If you are interested in having someone attend this seminar, please contact Kim Glaze.