Estate Planning: A Practical and Legal Tax Shield Approach

Estate planning refers to the process of creating and implementing a program for the growth, protection, use, and transfer of wealth. The process involves making arrangements for transfer of property which are both legally secure and subject to the minimum practical tax burden. Although the subject is somewhat a touchy issue for a very sentimental couple or family,Florida estate planning should not be regarded as preparations for death, but rather a practical approach to secure the future of the couple or family.

Those who have a better grasp of tax technicalities and opportunities for economic growth will always view estate planning as a positive idea. In fact, as estate planning professionals themselves affirm, what people thought to be perfectly reasonable explanations for not doing estate planning are sheer baloney. They are simply excuses for avoiding two of the most taboo subjects in many cultures – money and death.

However, that kind of mindset suggests very little knowledge of the benefits of estate planning. If only people can think outside of the box and entertain thoughts of happy living and a secured future, estate planning would be a most welcome activity. The truth is estate planning should start as early as possible.

Benefits of Estate Planning

The best mental picture of estate planning is acquiring more money and other assets to see a great future ahead. Here are the non-tax benefits of estate planning:

•   It can inspire the family members to live well and make good decisions, since achievements like graduating at the top of one’s class in school can mean rewards in the form of part of their supposed inheritance which they can enjoy earlier.

•   It ensures the parent or guardian that their children will not put their inheritance to waste since they are still there for advice and guidance.

•   It can help protect children’s inheritance in case the surviving spouse remarries. Incoming children or children of the new spouse will not benefit from your assets which have been given to your children as gifts or donations as rewards.

•   It provides peace of mind for the family.

•   It provides for the family in times of special need.

•   There is freedom from lengthy and stressing probate, as long as the estate plan is properly created.

•   The estate plan can protect your loved ones’ inheritance from lawsuits, creditors, divorce claims, and other claims.

There are also tax-related benefits of estate planning. Firstly, some strategies of estate planning like giving your children’s inheritance in advance through custodian trust accounts, as a legal gift, or using donation, lower taxes will be imposed. A specific property incurs less tax when given to your children in your lifetime than when they receive the same property as inheritance from your estate after your death. The same is true with a custodian trust account and a gift in the form of money.

There was even a suggestion that matches good estate planning; it is called the die-broke philosophy. If you have many assets to bequeath, the estate tax will surely cripple your heirs. The approach is simple: give out all your assets to your heirs during your lifetime. You may use either custodian trust if they are still minors or if they are of legal age, use the legal vehicles of gifting and donation.

All estate planning lawyers and professionals will agree that gift tax, donation tax, and federal tax for custodian trust are significantly lower than estate tax. Therefore, use your legal tax shields.