Estate Planning & Probate Specialists

Estate Planning & Probate Specialists

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Have you considered gifting as part of your estate plan?

In our August 15 post, we told you about the difficulties that may come up during estate planning due to the estate tax changes. There may be hope for families who are planning to leave assets to heirs. Two examples have been provided to show how gifting during the estate planning process may help assets to be protected from high taxes.

The first example is Elvis Presley who left his family $10 million when he died. Unfortunately, he did not use estate planning tools to his best advantage. Readers in Houston may be surprised to learn that his family paid over 70 percent of the value of the estate in taxes and fees after the singer’s death. It should be noted however that the laws were much different in 1977 when Elvis died, and this number may be higher than if he had died today.

Houston residents considering estate planning may also be interested in the second example of Sam Walton. Sam Walton, founder of Wal-Mart, used estate planning methods to leave his heirs $86 billion in stocks. This entire amount was free of estate taxes and was accomplished using gifting. The inheritance left the surviving family among the richest in our country.

Unlike Presley, Walton used a method of estate planning that allowed him to retain control of his business until his death. This gifting happened when Walton transferred his assets to a holding company. Then the holding company gifted non-controlling interests into a special irrevocable trust. The trust is then outside of the estate. After the death of the individual doing the estate planning the assets are not subject to estate taxes.

This type of estate planning can be particularly useful for a person to keep in mind in light of the changing tax laws surrounding estate planning. In fact, at the end of this calendar year some of the applicable laws are set to change. As laws change, it is always recommended that Houston residents review their estate plan. Should residents have questions or concerned, they should not be afraid to seek help. Planning for the future of one’s family and assets may be complicated, but can be successful with the right tools.

Source: Deseret News, “Gifting, estate planning can help avoid transfer taxes on inheritances,” Rich Bloomfield, Aug. 14, 2012