13 Smart Estate-Planning Moves

13 Smart Estate-Planning Moves

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In planning your estate, there are certain moves you should take which will help you save better and avoid much estate tax and you will still be able to leave enough for your heirs to inherit.

Rethink IRA investing strategies

Before the SECURE (Setting Every Community Up for Retirement Enhancement) act was passed into law, an inherited IRA could stretch for as long as possible with no limits. But with the SECURE act you are required to take an inherited IRA distribution within 10 years.

This has made it impossible to leave wealth for their grandchildren or very young children using this method. So families must rethink how they leave their asset.

Apply a Roth conversion technique

The Setting Every Community Up for Retirement Enhancement (SECURE) act also increased the age of taking the RMD (required minimum distributions) from age 72 to 72½. A way around this if your age is below the RMD age is to take a voluntary distribution and convert it to a Roth IRA.

Gift tax exclusion

This is a smart estate planning move which helps you avoid tax on gifts. There are certain exclusions from the gift tax.

Giving to a spouse who is a U.S citizen

Giving to a political organization

Giving to support health care

Giving an amount below the gift tax exclusion which in 2021 is $15,000

Couples can give this amount each to several people without incurring the gift tax.

Early usage of your lifetime gift Exemption

When you die having an appreciated assets and the exemption is lower, the estate tax payable on your asset will be higher because the estate will be more. So go ahead and leverage today’s exclusion on that asset which you think will appreciate and if you fear the exclusion will become lower.

Paying of educational and medical bills directly

One of the gift tax exclusion is if the gift either in cash or in kind is to cater for the recipient’s tuition fees or cover the recipient’s medical bills. So you can issue cheque to sort other people’s medical and educational expenses all day long without incurring tax.

Using irrevocable trust

You can comfortably move cash out of your estate below the tax exemption amount into an irrevocable trust for your spouse. The benefit of this is that you won’t be liable to pay tax. But it is difficult for some persons as they cannot access the trust again. But this you can do through your spouse

Using a bypass trust

With this kind of trust, when one spouse dies, the couple’s assets will be split in two and moved into two separate trusts. The first is the A trust and the second is the B trust. The A trust is also known as the marital trust and it is a revocable trust. It belongs to the surviving spouse and they have complete control over it.

The second trust is the B trust or the family trust and the surviving spouse has limited control over it. These trusts are not liable to tax.

Using an asset protection trust (APT)

An asset protection trust is a type of trust in which the person can fund the trust and can also be a beneficiary of the trust. He is allowed access to the trust. This type of trust is useful for shielding your assets against creditors, lawsuits, etc.

Using a revocable trust

The probate process could be a really draining task for your heirs after your demise. With revocable trust, you can avoid the probate process and make assets transfer easy to your beneficiaries.

Medicaid and special needs

With the cost effectiveness of nursing homes and long term care services, Medicaid would be a really nice way to keep up care for the middle class.

Cut down cost

This can really be applicable for families with simple estate. Instead of paying huge amounts to attorneys, you can get most of the work done online.

Make all your investments transparent

This you should do by cutting down every investment clutter. Make a list of all your investment and how they can be accessed. This will reduce this stress of your heirs in locating your investments. It will also prevent any of your assets from being lost.

Get a professional to work with you

This is very important as they will guard you through every step to avoid making costly errors. Our attorneys are available round the clock for consult and hire.

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

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