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Money Matters for Seniors
Estate Planning: The Gift that Keeps on Giving
Gifting is one of the many estate planning tools
available.
By
Robert Valentine, Certified Senior Advisor,
Jan. 23, 2006 - If youre like most Americans, you
like to give gifts nearly as much as you like to receive them. Luckily,
if youre serious about estate planning theres a handy technique called
gifting that can potentially save your family, friends and heirs a lot
of money on estate taxes in the future.
With gifting, you not only benefit yourself, you potentially save future
generations from a heavy tax burden. In addition to a reduction in
taxes, by reducing the size of your estate, you generally reduce the
amount of probate costs and legal fees which can often eat away much of
your estate. So what exactly is gifting?
Gifting is exactly what it sounds like: a gift.
Its a gift that can be given to a spouse, a family member or a friend.
Its a technique that has been used frequently by people to reduce the
value of their estate and can be done several ways.
Each person in the U.S. can give assets or property
of up to $11,000 a year. That amount applies to each individual they
gift to. This gift can be given to basically anyone without paying any
gift taxes, as long as the amount gifted stays under the limit. You can
give gifts, tax-free, to as many people as you wish. You can also gift
an unlimited amount of property to charity and your spouse.
By law, you can gift a spouse unlimited amounts of
property each year without paying any taxes. This isnt always
suggested however, since it just shifts the larger estate burden onto
your spouse. One helpful technique is to team up with your spouse and
gift to specific individuals, such as children and grandchildren. When
you and a spouse get together and gift, which the IRS has termed gift
splitting, you can give up to $22,000 to each individual without paying
any gift tax. This allows you to quickly reduce your estate by a large
amount.
Gifting is also a great way to give assets to your
family that will end up appreciating in value. That way, you not only
reduce the amount that may be taxed in your estate, but you reduce the
amount that your asset would have grown to by the time you passed away.
There are a great many details involving taxes and
gifting that remain to be seen. The tax laws and regulations can get
extremely complicated, which is why estate planning is best left up to
professionals. But the main idea remains, gifting can probably save
your estate and your heirs money in the long run.
While estate planning is often put off because of
the uncomfortable topic of death, it may be one of the most important
financial planning tools available. It may also be one of the most
important ways to save your family from heartache. One mention of Terri
Schiavo is all it takes to conjure up memories of legal battles,
congressional intervention, and a media circus that most certainly
missed the most important aspect of the struggle: Terri.
Gifting is simply one of the many convenient ways
to leave a legacy that remembers your life for its accomplishments
instead of courtroom battles. Whenever contemplating gifting, or
establishing an estate plan, its best to meet with a financial
professional and a qualified estate planning attorney. A little bit of
careful planning can go a long way. In the end, gifting allows you to
take advantage of tax savings and choose the way you want to be
remembered, which is truly a gift that will keep on giving.
Robert Valentine is a Certified Senior Advisor in
Huntington Beach, CA. He can be reached at (877) 732-2637.
About author
This article was submitted by Robert
Valentine of Financial and Retirement Management. Robert (CA Insurance
Lic #0C23496) is a Registered Representative of and offers securities
through Securities America, Inc., a Registered Broker/Dealer, Member
NASD/SIPC. Advisory services offered through Financial and Retirement
Management, a Registered Investment Advisory firm. Robert is a Certified
Senior Advisor in Huntington Beach, CA. Several of his articles on
financial planning matters that concern investors have been published by
SeniorJournal.com. Robert
can be reached at (877) 732-2637.
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