Planning Your Estate While Tax Reforms Efforts are in Flux
There’s a lot of uncertainty surrounding estate planning in the United States right now, mostly due to the new in administration in Washington, D.C., and the potential for major shakeups to the estate tax. One of the issues on which President Donald Trump campaigned was repealing the estate tax, long referred to by critics as the “death tax.” However, there has yet to be any legislation proposing a repeal or replacement.
The following are some strategies you can use as you await decisions from lawmakers:
- Annual exclusion gifts: It is unclear whether there will be a repeal of the gift tax, so people looking to minimize their estate tax liability should continue to plan for making annual gifts of up to $14,000 to their chosen loved ones. These gifts remain tax deductible up to $14,000 per recipient and allow you to pass on a significant amount of wealth tax-free, while lessening your potential estate tax burden.
- GRATs: Grantor Retain Annuity Trusts (GRATs) allow you to loan your investments to your children or other loved ones without that money being counted toward your lifetime gift exemption. The people to whom you loan those investments then benefit from any growth that occurs beyond the initial contribution. That contribution must be paid back in installments over a certain number of years.
- Charitable remainder trusts: Another way of passing along assets in a way that will not be affected by estate tax reform is setting up charitable remainder trust. The trust’s creator retains the right to receive annuities of percentages of the trust every year. After the full term of years expires, the balance of all assets passes to a charitable organization of your choosing.
There are many other options to help you plan your estate amidst uncertainty regarding federal estate and gift taxes. For further guidance on this issue, consult a knowledgeable Florida estate planning attorney at The Charles Law Offices.