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Gift and Wealth Transfer Planning

Most family partnerships are initially funded with the transfers of property by older generation family members to the partnership, followed by a gift or series of gifts of partnership interests to family members.  We recommend that more than one individual, i.e. a spouse, contribute assets to the partnership initially to ensure that the partnership meets the basic requirement that there be at least two associates.

Gifting to Individuals and Trusts

In the simplest form, gifting is a wealth transfer strategy that represents an opportunity to transfer assets to children or other beneficiaries during your lifetime and reduce your taxable estate.  Having established gift techniques you can also; provide income for yourself or your heirs, leverage your annual exclusion gifts, and pay for a child's education.

Annual gifting will allow you to gift up to $14,000 for 2017 and $15,000 for 2018 tax free which is called the annual exclusion.  Any gift over that amount requires you to file a gift tax return.

If you pay someone's medical or education expenses directly to the provider, the gift is not included in your annual exclusion amount. If you pay $25,000 for your grandchild's tuition directly to the school in 2010, you can still gift up tp $14,000 tax free to him or her this year.

If you're helping your child or grandchild save for college using a 529 college savings plan, you can gift up to the annual exclusion per year tax free or you can make up to five years' worth of annual exclusion gifts in one year to benefit any one person.

If you contribute the maximum amount using the five-year acceleration rule, you will not be able to make other annual exclusion gifts to that beneficiary for five years without incurring gift tax consequences and filings.  If you should pass away within five years of the date of your gift, a prorated portion of the original gift will be included in your estate tax calculation.

Wealth Transfer Using Trusts

Many types of trusts can help you accomplish your estate planning goals. Below are two common types of trusts designed to help you transfer you wealth efficiently while avoiding probate and reducing estate taxes.

Life Insurance Trusts are an irrevocable life insurance trusts lets you keep the death benefit of your life insurance policy outside of your estate, which means your life insurance proceeds will not increase your estate tax liability. In fact, you can design your life insurance trust so that the proceeds are available to be applied towards your estate tax liability, leaving your actual wealth for your heirs. 

Irrevocable gift trusts can help you to give beneficiaries access to gifted funds according to the standards you set, until the beneficiary reaches an age that you select these trusts can even continue for multiple generations.  

Revocable living trusts are still part of your taxable estate, they do help you effciently transfer wealth to your heirs and help them avoid the probate process.

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