Securing Your Legacy for Future Generations
In today's complex estate planning environment, it's critical that affluent
individuals have the benefit of best-in-class advice tailored to their
Shoreline Wealth & Investment Management works with professionals to provide
expert advice on tax-efficient wealth transfers, consistent with your personal
values and goals. We can help you to:
your estate plans with tax, investment, business, and
plans to manage problems associated with a sizable
how to provide for future generations
tax-efficient strategies to transfer your wealth
Working together, we can help you create a legacy that provides for your family and projects your values and vision across
Estate Planning Basics
Estate planning offers an opportunity to ensure that your family and future generations are financially secure according to terms that you decide. Your careful decisions today
can guarantee that your will is executed and your assets distributed according to your intentions. You can plan in such a way that your descendants avoid probate administration
of your estate and your estate pays the minimum amount legally possible in estate taxes.
Proper planning can protect your estate, which is the total of all your assets and liabilities, including real estate, business interests, stocks, and personal property, from defaulting
to the distribution scheme set forth by the laws of the state in which you live, and can smooth the distress surrounding your death or incapacitation. Although you may prefer not
to think about a time when you will not be there for your family, estate planning can and should be rewarding and satisfying. Once you have completed your estate plan, you will
know that you have provided for the people and causes you care about.
Estate planning is crucial in order to avoid probate, the legal process by which a court supervises the administration of the decedent's estate, validates the will, if there is
one, and ensures that debts are paid and assets are distributed to the appropriate beneficiaries. The probate process varies by state and by the size and complexity of an estate's
assets and liabilities. Although a simple estate may complete probate in only two to six months, a more complicated estate could take years. This can be an expensive process, and
one that allows public access to the family's financial information through court documents. Through proper estate planning, you can avoid probate.
Estate Tax Exemptions and Rates
Estate planning can reduce or eliminate the amount of taxes that your estate must pay after your death. The amount protected from taxation, known as the lifetime exemption, is $1 million.
Prior to making any distributions to your beneficiaries, your estate will have to pay taxes on the amount that exceeds your lifetime exemption. The estate tax rate is currently flat at 45% with the current plan set to expire in 2010. However, in 2011 it will restart at lowest estate tax rate at 41% and the highest at 55%. The basic evaluation of your estate includes determining the fair market value of your current assets. Over time, your assets are likely to appreciate, which means that your estate tax liability will also increase.
Without proper estate planning, there can be a dramatic reduction of the value of the estate that your beneficiaries will actually receive after estate taxes are paid. Adequate
planning is essential so that your assets are protected from taxation and are distributed according to your intentions.
Terms and Definitions
There are many strategies you can use to plan your estate, depending largely on your total net worth and your relationship with the beneficiaries of your thoughtfulness. Here are
some terms and concepts that will help you understand your estate planning options.
Annual gift tax exclusion: The
federal government allows you to give any individual
interest gift of up to $13,000 per year, without paying
gift taxes. You must pay a gift tax or use your applicable
exclusion amount on any gift that exceeds $13,000 to
a single recipient or does not qualify for this exemption.
To qualify, the recipient must have a "present interest" in
the gift, which means that the recipient must legally
be able to use the gift immediately. If you and your
spouse make a gift together, you can each give $13,000
to each individual recipient, for a total tax-free gift
of up to $26,000. Gifts that exceed $13,000 (or $26,000
from married couples) will count toward your lifetime
exemption (see above).
Applicable exclusion amount, or unified credit equivalent,
or lifetime exemption:During your lifetime or following your death, you can transfer this amount to others (in the aggregate) without paying taxes. In 2006, this was 1 million but increases to 1.1 million under the new 2011 terms.
Generation-skipping transfer tax: The federal
government assesses a transfer tax on aggregate transfers
that exceed $1,060,000 million (indexed for inflation)
to grandchildren, great-grandchildren, and other individuals
who are two or more generations removed from the donor.
This is effectively a double tax that is intended to
dissuade people from leaving assets to grandchildren
in an effort to avoid estate taxes that would otherwise
be paid by the son or daughter's estate. Each person
is granted a GST exemption of $1,060,000, which can
be allocated to transfers that would otherwise cause
a generation-skipping transfer tax to be paid.
Gift tax return: An annual gift tax return (Form
709) must be filed by April 15th of the year following
the year in which a person makes any gift that is not
fully sheltered by the gift tax annual exclusion. If
a return is required, all gifts (including those falling
within the $13,000 annual exclusion) must be reported,
but an exclusion will be allowed (up to $13,000 per
donee) for any gift that qualifies as a present interest
gift. The total amount of taxable gifts in excess of
the allowable annual exclusions will use up an equivalent
amount of the donor's lifetime exemption (currently
$1,060,000), and if the lifetime exemption has already
been fully used, the donor must pay a gift tax. A gift
tax return is sometimes also filed to allocate the
donor's GST exemption to a gift to avoid a generation-skipping
tax on the gift.
Trust: A trust is a legal entity that holds
property on behalf of an individual, group, or other
legal entity. The person who sets up the trust is the
grantor, the person or group of people who manage the
trust is the trustee, and those who benefit from the
trust are the beneficiaries. Sometimes trusts are used
as vehicles to avoid federal and state inheritance
taxes. Other times, trusts are designed to ensure that
the assets held in trust are used in a manner specified
by the grantor.
Unlimited marital deduction: When a spouse dies,
all of the couple's assets can go to the surviving
spouse without estate taxes. Unfortunately, this seemingly
simple kind of transfer fails to take advantage of
the lifetime exemption of the first spouse to die and
can be a tax trap for the beneficiaries of the remaining
Shoreline's Competitive Edge
Whatever your estate planning need, Shoreline Wealth and Investment Management can assist you in obtaining the best in tax planning advice.
For more information:
If you'd like more information about how diversified investment advisors can help you achieve your financial objectives through personalized wealth or retirement and risk management strategies, please contact us. We welcome the opportunity to discuss your unique needs and how we may best meet them.
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Charles M. Bloom, Registered Principal offers securities
and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.
The information contained in this web site is neither an offer nor solicitation of any security or service.