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Gerry Andrade & Associates, Inc. CPA - Torrance, CA

Call Us: (310) 316-9115

Trusts, Estates & Gift Planning

Proper planning can save you thousands of dollars.

There are two things in life, death and taxes. Proper planning will prevent Uncle Sam from getting the major portion of your hard-earned money. The top estate rate is 47%.

Assets exceeding $2,000,000 in the years 2006 - 2008, and $3,500,000 in the year 2009 may be taxed as high as 47%. In the year 2010 the estate tax is abolished so the exemption is unlimited and in 2011 the estate tax is reinstated with a $1,000.000 exemption unless Congress and the President enact and sign a bill.

I would suggest adding up the value of all your assets - you may be surprised what your estate is worth. If your assets exceed the $2,000,000 lifetime exclusion, you may want to do some estate tax planning.

Here are a few simple planning techniques:

  • You and your spouse can give away $22,000 per year to a beneficiary. You may double the gift by including their spouses and their children.
  • You may also exceed the $11,000 gifts to each recipient, by paying for your children and grandchildren's medical expenses and school tuition. The check must be paid to the provider.
  • Establish a 529 college savings plan for your children or grandchildren.  This type of college savings plan provides the following tax saving benefits:
  • Earnings and withdrawals for qualified higher education expenses are free from federal tax.

There are no income limits. You can contribute no matter how much you earn.

You can contribute until your account value reaches $250,000.

Up to $11,000 ($22,000 for married couples) can be contributed each year without gift-tax consequences, and under a special election, up to $55,000 ($110,000 for married couples) can be contributed at one time by accelerating five years worth of investments.

You maintain control of the assets. You decide when the money will be spent.

  • You can make limitless transfers to your spouse during your lifetime or through your estate since there are no taxes on spousal transfers. However, leaving everything to your spouse may not be wise. You have failed to utilize another $2,000,000 exclusion when your spouse dies. Proper planning will allow you to use the exemption in both estates. You may be able to transfer all your assets to your beneficiaries tax-free.
  • If you already have total assets that exceed the $2,000,000 exclusion and you are about to inherit additional assets, you may choose to transfer them to your heirs. This way, property will be out of your estate, avoiding any estate tax.