How to Gift Through Your Estate Plan

September 3, 2020 in Uncategorized | MARTIN WREN, P.C. | LEAVE A COMMENT

What is gifting and how do you do it through an estate plan? This is something many people wonder as they go through their lifetime planning process. In short, a gift is a significant item or asset you leave to someone after you die. Many people “gift” a large sum of money to a charity or a piece of property to a loved one. You can do this through your will, a beneficiary designation on a retirement account or a living trust. If you’re looking for a way to reduce estate taxes, gifting might be your best option. The following are some common ways to leave a gift to a beneficiary.

With a Charitable Bequest

When you leave a charitable bequest to an organization through a living will, you still have full use of that asset while you’re alive. When you pass away, the organization becomes the owner of the asset. You could give an outright bequest, a contingent bequest or a residuary bequest.

Through a Financial Account

Speak with a representative at your bank or credit union to see if you can make an account payable on death. A POD designation allows you to leave everything in that particular account to an individual or a charitable organization. This can be done with savings accounts, CDs, market shares and other types of accounts.

With Your Retirement Account

Whether you’ve got an IRA, 401(k) or another type of retirement account, you can often place it in a trust to be gifted to someone at your passing. This is a great way to save money on income and estate taxes. If you leave the account to a charitable organization, you can often leave the entire amount. If you leave it to a family member, there’s a chance they’ll only receive a portion of it.

Through Your Life Insurance Policy

Placing your life insurance policy in a trust to be gifted at your passing is a great way to earn an income tax deduction. Your future premiums will also be tax deductible. You’ll need to speak with your life insurance company to get this set up with the proper paperwork and signatures.

With Your Personal Property

If you own your home, a vacation home, a farm, a condo or any other residence, they can become gifts to beneficiaries after your death. You still have complete access to use the property during your life, so everyone wins in this situation. You’ll also get a charitable tax deduction.

Getting Started with Gifting

There are a lot of benefits of gifting, and many ways to go about it. Contact an estate planning lawyer, like from Yee Law Group, to get started with the gifting process today.

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