The Best Graduation Gift? Wealth Preservation

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Consider giving children, grandchildren, and future generations a gift that outlasts you

If you have a child or grandchild celebrating a special occasion such as graduation this spring, you may be reflecting on what would be a meaningful gift. How should you express your pride and joy in their accomplishments?

A fancy pen, cash, or a check are certainly options. But how about giving something that will outlast you: a sound estate plan that preserves wealth for them and for future generations?

Taking stock

The first step in developing a sound estate plan is to sit down with an expert to identify all your assets. Your initial meeting might not be with an estate planning attorney like me; rather, it might be with your CPA or financial planner. They can help you take stock of which assets are where.

Transferring assets

Next, you need to figure out how best to transfer those assets to loved ones given current tax law.

When it comes to tax law, it seems things are changing by the hour in Washington. But it's a good idea to examine your options sooner rather than later.

In particular, take a look at:

  • The best timing for making any gifts to children or grandchildren
  • Whether it’s a good time to set up a Grantor Retained Annuity Trust or intra-family loan, thanks to low interest rates. There's always chatter in Congress about eliminating short-term, zeroed-out GRATs.
  • Recent or coming changes in estate tax structure and what it means for wealth preservation in your family
  • Limits on deductions for charitable gifts. For public charities, it’s up to 50% of your adjusted gross income. When giving cash to private foundations, you can deduct up to 30% of your adjusted gross income and up to 20% for publicly traded stock. For other appreciated property, you are limited to your cost basis. (Your basis in property is generally what you paid for it, but different rules apply to figuring your deduction, depending on whether the property is ordinary income property, or capital gain property.)

Make a lasting gift

Make a resolution to sit down with an estate planning attorney and map out the pieces and plan for your estate. Then you can feel you are giving loves ones something truly meaningful: a more secure financial future.

 

All the best,
Janet Brewer

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Janet Brewer
Law Offices of Janet L. Brewer

Janet Brewer has practiced California estate, gift-planning, and probate law exclusively since 1991.... View Profile »


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