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Estate planning: a way to prepare for the future

Having a solid estate plan is critical if you want to pass your wealth and legacy on to the next generation.

Using a will, trust and/or advance health care directives can ensure your wishes are met after you pass away, or become incapacitated.

Estate planning can also serve as an efficient way to examine how to minimize taxes when you gift assets.

Using a trust can help preserve wealth and protect beneficiaries

You can use several forms of trust planning when preparing an estate plan.

Creating a charitable trust allows you to distribute assets to a chosen charity.

Another Trust option when estate planning is a revocable trust. It can protect beneficiaries by managing and controlling investments when they lack experience.

Utilizing these types of trusts when transferring high-value assets to your heirs can not only be more efficient than the probate process, but can potentially reduce taxes and shelter your assets from estate and transfer taxes after you die.

Gifting your assets and avoiding high taxes

In 2023, you can gift $17,000 worth of assets and avoid the federal gift tax. However, for gifts worth more than $17,000, the excess amount will count against your lifetime gift and estate tax exemption, which is $12.92 million for 2023. Exceeding that amount subjects your gifted amount to a tax rate as high as 40%. If you have a large estate to pass on to beneficiaries, consider creating a revocable trust, allowing you to retain control of all the assets in the trust.

Avoiding the probate process

Creating an estate plan featuring trusts is also an excellent way to avoid probate, which can be a long and tedious process.

Indeed, using trusts of many types can effectively bypasses the probate process.

As revocable trusts become irrevocable when you pass away or become incapacitated, they can help your heirs avoid ongoing administrative expenses.

Knowing your options when estate planning can help ensure your wishes are met when passing assets on to heirs.

Utilizing trusts can be one of the best ways to avoid taxes and ensure your beneficiaries are protected.

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