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Thursday, August 16, 2012

Leaving Behind or Gifting Your Assets Does Not Mean Losing Control

A recent article in the Wall Street Journal by Laura Sanders (link below) explored the many ways in which you can provide for your loved ones and still ensure that the assets you have left are used in a productive manner after your gone.  In fact, there is a great deal of leeway for individuals who wish to provide conditions on the distribution and release of not only the inheritance that they leave behind, but also gifts they may wish to make now. 

As Ms. Sanders explains in her article, what you give away and how is especially relevant because of the unusual, and likely short-lived, current estate and gift tax exemptions which allow a taxpayer to transfer up to $5.12 million tax-free, either at death or through lifetime gifts. Because the current exemptions are set to expire in January 2013, you should consider making gifts before the end of the year. 

While making gifts now means giving up control of a portion of your assets, you can structure the terms of your estate plan to restrict distributions until the achievement of a certain goal or landmark event.  You can also use your assets as future incentives to encourage your children or grandchildren to complete higher education or become entrepreneurs.  When designing your estate plan, you may also want to include a popular provision provided in many states, including Alaska, prohibiting your beneficiaries from contesting the validity of your estate plan or else risk losing their inheritance. 

To read the article in its entirety, see Laura Sanders, How to Control Your Heirs From the Grave, Wall Street Journal, Aug. 10, 2012.

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