A recent article on thestreet.com,"How to Protect Your Estate From Getting 'Whacked' Like James Gandolfini's," discusses a powerful estate tax planning tool – the irrevocable charitable lead trust. This trust cannot be amended, revised or canceled.
"When he died in 2013 at the untimely age of 51, actor James Gandolfini bequeathed a financial disaster to his heirs. Gandolfini hadn't properly prepared his estate, an oversight that's all too common. The man famous for playing mob boss Tony Soprano left about 80% of his $70 million estate unprotected against estate taxes, with federal and state rates that will add up to a combined 55%. Don't be a "wise guy" to your family. Make sure you've put in place a plan to provide for your children and grandchildren far into the future. To protect your financial legacy, that means minimizing your estate tax bill." -Reference: thestreet.com
This trust provides a stream of income for a designated number of years to the specified charity. At the end of that period, the property held in trust reverts back to the donor or to the donor's designated beneficiary.
When the donor makes the gift under a charitable lead trust, he or she immediately receives a federal income tax deduction equal to the present value of the future income stream. But the donor is taxed every year on the value of the income interest that is payable to the charity.
A donor may create a charitable lead trust during his or her lifetime, or state in his or her will that it be established at death with the property returning years later to the designated heirs. When the donor's will establishes the trust at death, his or her estate receives an estate tax deduction instead of an income tax deduction.
The goal of the creator of a charitable lead trust is simple: reduce taxes on the estate that you leave to your heirs when you pass away. This is done by donating to charities from the estate until all taxes are reduced. Once this is accomplished the estate is subsequently transferred to your beneficiaries.
Don't let your estate get whacked! Work with a qualified estate planning attorney to ensure that you put a plan into place that will provide for your children and grandchildren way into the future. This means you need to work on minimizing your estate tax bill. While you are at it, talk with an estate planning attorney about an irrevocable charitable trust to see if it might be a good fit for your circumstances.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.