You see so many terms and acronyms tossed around when you are doing your inheritance planning research that it can all seem kind of complicated if not completely confusing. There are indeed some rather complex vehicles and combined strategies that are appropriate for some estates depending on the specific dynamics of a particular case. However, some of the strategies that are routinely utilized when planning estates both large and small are very simple to understand but highly effective all the same. Below you will find a trio of them to take into consideration.
Tax-Free Gift Giving
What could be more simple and efficient than giving your loved ones gifts while you are still around to see the smiles on their faces? You can give unlimited educational and health care gifts, and you can also give gifts of as much as $13,000 to as many recipients as you would like to each year, totally free of the gift tax. Plus, none of these gifts impacts the $1 million lifetime gift tax exclusion amount, so you can give gifts of up to a million dollars throughout your life tax-free in addition to the $13,000 per person annual exemption.
Where would your family be financially if you were to pass on and no longer be able to bring home a paycheck? This is the question to ask yourself when you are considering life insurance. The fact is that life insurance is a tried and true income replacement vehicle and it is just as useful today as it ever was.
Pay On Death & Transfer On Death Accounts
Pay on death (POD) and transfer on death (TOD) accounts are the model of efficient asset transference. You simply open an account and name a beneficiary, and at the time of your death the account passes over to the beneficiary and the transaction is not subject to the time consuming and expensive probate process.