Attorney Sandy Ard, of the Ard Law Firm, PLLC, writes about Estate Planning, Medicaid Planning, Veterans Benefits Planning, Wills, Trusts, Living Trusts, Pet Trusts, Special Needs Planning, Asset Protection, Elder Law, Farm Trusts and Non-citizen Spouse Estate Planning, Probate & Estate Administration, Business Succession, and Family Business Planning in Houston, Texas, and the surrounding areas.
Can you really ever have too much of a good thing? When it comes to the estate and gift tax exemption amount, many heirs would be thrilled when $5.25 million is up for grabs. How could that be too much of a good thing? But parents have a different answer; some believe that $5.25 million is just way too much of a good thing to leave as inheritance to their children.
None other than the venerable Wall Street Journal explored this subject in an article appropriately titled “Can You Trust Your Kid With $5.25 Million?”
As you likely are well aware by now, the recently enacted American Taxpayer Relief Act of 2012 (ATRA) sets the unified estate and gift tax exemption at $5.25 million per taxpayer (with a nearly “automatic” $10.5 million per married couple). Using certain estate planning “tools” (e.g., to make “discounted” wealth transfers) you can do a great deal better than that, too.
So, what do you think about leaving a large inheritance to your progeny? By default in most jurisdictions, your children would inherit their inheritance outright without any restrictions, guidance or protection at age 18 (or immediately if already older than age 18). If that is not enough motivation to make proper estate plans now, then little may do the trick.
Proper estate planning means providing the legal means to both protect the inheritance “for” and “from” your descendants. Have you ever noticed that some children “grow up” and others just “get older”? Accordingly, your planning should reflect the unique needs of each of your children. While you are at it, perhaps you might want to make provisions directly for your grandchildren. Many grandparents say had they known how much fun grandchildren are, they would have had them first!
When you make financial arrangements for your heirs, be prudent in your decision so that the inheritance is a blessing and not a curse. And don’t forget to leave an inheritance to your favorite charity or charities, as well.
Reference: The Wall Street Journal (January 18, 2013) “Can You Trust Your Kid With $5.25 Million?”