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trusts & trust administration Archives

Estate planning and philanthropy

Even though philanthropy is frequently used as part of a tax-saving strategy, people in California can also benefit from the charitable giving in ways that are related to starting and maintaining a legacy, enjoying personal fulfillment and forming a connection with future generations. There are certain steps individuals should take to make sure that the philanthropic goals they have set for their lifetime and after they have died are fulfilled.

The surviving spouse needs to make important decisions

For California couples who have been farsighted enough to establish an estate plan, there comes a well-deserved peace of mind that their assets will be handled well after their deaths. While no one escapes their own mortality, having properly executed legal documents in place necessary to handle the transition when the time comes is reassuring. However, estate planning is not a one-and-done proposition; major life changes necessitate reviewing and sometimes altering one's plan.

Planning for estate taxation into the future

People in California with significant estates may want to think about the future of estate taxation even after the major increase in the transfer tax exemption that was included in the 2017 Tax Cuts and Jobs Act. The law, which went into effect in 2018, doubled the exemption on transfer tax to $11.18 million per individual or $22.36 million per married couple. However, while this exemption allows even very wealthy individuals to avoid federal estate taxes, it has a built-in sunset clause. Without a specific renewal, the increased exemption will expire in 2025 and return to its 2017 level.

SLAT helps some families take advantage of estate tax exemptions

The significant changes to estate tax law that passed through broad tax legislation in 2017 mean that, at least for a while, only a small portion of the wealthiest families in the country would be subject to the estate tax. These changes, which raised the exemption level from $5.6 to $11.18 million per individual, are set to expire in 2025. Families that would benefit from the raised exemption should take advantage of the situation in case the changes are allowed to sunset.

How to fund a trust and ensure that assets are transferred

Creating a trust can be a smart move for anyone in California who has assets they want to protect and pass on to designated beneficiaries in a way that offers protections against probate and certain taxes. After a trust is set up, the next step is to ensure it's sufficiently funded. Real estate can be handled with a deed or deed in trust that transfers a property to the established trust. It's often advisable for trust holders to determine if it's necessary to re-file with the county auditor's office to benefit from tax exemptions.

About charitable remainder trusts

California residents can include various types of trusts in their estate plan to ensure that their assets are managed and distributed in accordance with their preferences. One type of trust, a charitable remainder trust, can be used as of source of income for the donor while the remaining assets are donated to the donor's favorite charities. This irrevocable trust provides a form of control and flexibility that makes it useful for estate planning, tax management and retirement purposes.

The benefits of professional estate planners

California residents and others who are thinking about creating an estate plan are encouraged to do so with professional help. Ideally, an individual will have an estate planner as well as an accountant or financial adviser as part of a larger team. It may also make sense to consult with an attorney as part of the process of creating a plan to transfer assets to future generations.

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