Proper Estate Financial Planning Now a Must, in View of New Tax Rules
A Wall Street Journal article dated September 6, 2013 tackles the changing trends in estate planning. Following the recently imposed $10.5 million ceiling, more folks now aim to reduce their income tax payments in an effort to secure their estate plans. Couples whose estates exceed the ceiling amount will be required to pay a progressive federal tax.
Careful financial planning is, thus, required to lay down an estate. Even with judicious spending, it would be hard to amass enough cash to pass on to your kids. What’s more, not a lot of people have the investment acumen required to make good financial decisions. First-time investors may want to cooperate with a company that offers financial management services – like USEFS Inc., for instance.
Now that tax rates have increased, people with substantial income will need to tread more carefully. One expert recommends that well-to-do parents should create intra-family loans to their kids who belong to low-income brackets. The money received will still be received in full albeit taxed at a lower rate, thus protecting its value. Another expert suggests that parents can give their children enough cash to fund Roth IRA and 401(k) accounts to defer taxes.
While reducing income tax has recently become the prime directive of estate planning, some trusts that were used in the past to help shape estates have lost their effectiveness. Chief among these are so-called qualified personal residence trusts and credit shelter trusts. Not all trusts are at risk in view of the new rules, but it can rub investors the wrong way when they're being asked to relinquish direct control over a portion of their wealth.
In any case, estate planning can be rather confusing for those unfamiliar with the key concepts involved. It's quite possible for a careless individual to be stuck with tax payments meant for someone else on a higher tax bracket. Fortunately, certain firms offer expert financial management services to people who need professional guidance.
You'll want to leave behind some measure of financial security for your family should something happen to you, but you can't just throw your money into whatever attractive investment opportunity comes your way. Yet with the help of a financial management expert, you can put your finances in order and keep your estate intact for future generations.< Credit: Tim Maurer, Forbes