Despite the obvious benefits, many of the wealthiest families have not taken adequate steps to protect their estates and ensure that their wealth is passed down from one generation to the next. Even families of modest wealth can reap amazing benefits from appropriate estate planning. If you are concerned with how to preserve your legacy for generations to come, let our estate planning attorneys help you to prepare now.
Understanding How to Preserve Your Legacy
Proper planning can certainly help preserve your legacy by using estate planning tools such as wills, powers of attorney, living trusts, and other tools. A comprehensive estate plan needs to designate who will manage your assets in the event you become incapacitated. Most estate plans include a durable power of attorney and a will. However, there are several other estate planning tools that can be used to protect your estate for your heirs after your death. Los Angeles estate planning attorneys are equipped to help you create a comprehensive plan that will benefit your family and preserve your legacy for generations.
What is a Generation Skipping Trust and Do I Need One?
One type of trust that is often used in legacy wealth planning is the generation-skipping trust. The generation-skipping tax exemption is the same as the federal estate tax exclusion. This is a type of trust allows you to keep your generation-skipping tax exemption on gifts to your grandchildren. Individuals who want to leave money specifically to their grandchildren can use a generation-skipping trust. For instance, you can transfer $100,000 to a generation-skipping trust and let it earn interest for many years. As a result, the value of the trust will be significantly increased when the assets are finally distributed to your beneficiaries.
Consider Creating Family Wealth Trusts
A trust is a great way to protect assets from estate taxes, capital gains taxes, and the expense of probate. Trusts can also be a much-needed defense against the less financially prudent members of your family, which can go a long way toward protecting wealth from one generation to the next. Trusts can also assure that your values and wishes are carried out down through the generations. Generally, when a family wealth trust is created, it is specified as an irrevocable legal instrument, and cannot be altered once it has been created. When the grantor’s assets are transferred to that trust, they are permanently removed from the grantor’s estate, and not be subject to estate taxes.
Reduce Taxes to Preserve Your Legacy
Proper tax planning, including generation-skipping taxes, gift tax exemptions, and dynasty trusts, are crucial. This year, you are allowed to give a gift of up to a specified amount before your estate will incur taxes. This is known as a personal estate tax exemption. If your total assets exceed that sum, you will need a legacy plan in place, which takes into consideration your estate tax liability. Experienced Los Angeles estate planning attorneys are prepared to take the steps you need to reduce the impact of estate taxes.
Married couples are entitled to a marital deduction, which allows them to transfer property to one another, either during their lives or at their death, without paying any federal estate or gift taxes on that amount. When the spouse giving the gift dies, the value of the property passing to the surviving spouse is deducted from the gross estate of the spouse who is deceased. The exempt amount is unlimited.
Incorporate Charitable Donations in Your Estate Plan
Charitable donations are not only a worthwhile investment, but they also provide a nice tax advantage. To encourage people to be philanthropic, the federal government has created tax deductions for donations to qualified charities. This tax benefit can be included in your legacy wealth planning.
Pass Your Knowledge Down to Future Generations
The benefit of passing on your knowledge regarding how you manage your wealth must not be overlooked. If you do not, your heirs can make poor investment decisions or bad financial management decisions that can affect your families generational wealth. Teach your children to be responsible financially and instill in them the responsibility to pass that knowledge on to their children. Even your goal isn’t to preserve your legacy, simply giving your children and grandchildren the knowledge necessary to keep them from worrying about paying the rent is worth the time and energy.
Join us for a free seminar today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
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