Nobody appreciates it when people make things sound more complicated than they really are, and everyone who goes to an estate planning attorney is experienced in the business world in their own right. The fact is that there are some estate planning tools that are simple as can be, but highly efficient and effective all the same. We would like to place three of those under the spotlight here today.
Giving Tax-Free Gifts
Gift giving has a number of advantages both personal and financial. On the financial side, gifts that you give while you are alive are clearly not going to be subject to probate, and they reduce the overall value of your assets, which can be useful for estate tax purposes. There is a $1 million lifetime gift tax exemption, so any gifts that you give are completely tax free up to that amount. And, you can give as much as $13,000 per person, per year, to an unlimited number of recipients free of the gift tax, and these gifts do not reduce your lifetime exemption allotment. On a personal level, you get to transfer assets to your loved ones in the flesh and in so doing experience the ineffable joy of giving.
Pay On Death Accounts
A great way to avoid probate and place money directly into the hands of your heirs when you pass away is though the opening of pay on death or transfer on death accounts. You simply go the bank and open an account and name your beneficiary. When you die, the account becomes the property of your heir; in addition to bank accounts, this can also be done with many brokerage accounts.
Life insurance is something that is often times hiding in plain sight when estate planning is discussed, but it plays a very important role for many people. If your family relies on the income that you earn, life insurance is an invaluable and affordable income replacement vehicle that you really can’t do without. It is also an integral component to many business succession strategies.