Untitled

A gift given at your death as directed by your Will or Revocable Living Trust.

There is a separate income tax on the appreciation of assets held for investment. The best example is stock. You purchase some shares of stock for $10 and then you sell these shares for $50. You will be taxed on the $40 of appreciation. This gain will be taxed at a different tax rate from the rate you pay on your ordinary income (interest, dividends, and earnings from employment).

Charitable Remainder Trust

A Trust created by a donor that pays a fixed percentage for life or a period of years. At the end of that time frame, the assets remainder in the Trust goes to charity. Like a Gift Annuity, the donor gets a tax deduction at the time of the gift and annual payments for life. Unlike a Gift Annuity, the charity does not actually receive any funds until the termination of the Trust, since the Trust controls all assets in it.

Childrens Trust

This is a Trust which is established after your death through your Will or it can be part of your Revocable Living Trust which also takes affect after your death. This Trust will allow you to establish the "rules" for how money can be spent for your children, as well as extend the time for actual distribution of assets to children until they reach maturity. The usual Children's Trust will distribute as much as necessary for the care, support, and education of the children. Many parents consider the age of maturity for children to be in the early twenties.

Double Tax Asset

Many people have retirement assets such as an IRA or a 401(k) plan at work. When money is withdrawn from these accounts, then the person will pay income tax. Many people don't realize that after they die, not only will your beneficiaries pay income tax on these accounts but if your estate pays death tax then these accounts will also pay death tax on top of the income tax. If these accounts are used for charitable gifts at your death, then both the income tax and the death tax are eliminated.

Gift Annuity

A contribution that you make to a charity that is part gift and part investment. By making the contribution, you receive an agreement with the charity to pay you a fixed amount for the rest of your life. At your death, the residue of the amount you initially gifted is retained by the charity. At the time of the gift, you get a tax deduction for a portion of the original amount contributed. In addition, a portion of each annual payment to you is tax-free. The annual payment percentage is based on your age at the time of the gift.

Living Will

A statement of your wishes regarding medical treatment, nutrition and hydration should you be unconscious and in an irreversible terminal condition where death is imminent. This document allows you to state how much medical treatment you desire and if and when life support, hydration or nutrition may be removed. Without a Living Will, these decisions would be left up to the person you name in your Power of Attorney for Health Care document.

Power of Attorney for Health Care

A document in which you name another person (your agent) who can make health care decisions for you, if you are unable to make decisions for yourself. The person you name can request or withhold medical treatment and other medical decisions you would make if you were competent. If you have a valid Living Will your agent's power is subject to that Living Will.

Power of Attorney for Property

A document in which you name a person or persons who can conduct financial transactions for you. The person you name is authorized to sign for you and conduct any business that you would be able to conduct, if you were present. If you wish to limit your Agent's power, you can restrict it in the document. A "Durable" Power of Attorney for Property is one that is valid even if you become incompetent or incapacitated. There is specific language in the document that makes a Power of Attorney "durable". If you do not want someone to be able to act for you if you are incompetent, the specific language should be excluded from the document. In most cases for estate planning purposes, a Durable Power of Attorney is used.

Revocable Living Trust

A Revocable Living Trust is a tool used to eliminate the probate process at your death, by creating a Trust and transferring your assets into it. Since a Trust doesn't die when you die, any assets in the Trust do not have to go through probate. While you are alive, the assets are handled just like they would be if you owned them in your own name. Since you name yourself as the Trustee and the beneficiary of the Trust, as long as you are alive you have full control of your assets just as you do now. The Trust is revocable, so you can change it or eliminate it and put the assets back in your name individually at any time.

Will

Formally called your "Last Will and Testament", your Will is a statement of what should be done with all property owned by you at your death. A Will does not eliminate the need for probate as many people mistakenly believe, but it is the document giving direction to the probate court as to how your assets should be distributed. It controls all property in your name and not passed to your beneficiaries by Joint Tenancy, "pay on death" clauses, or direct beneficiary designations such as you would find with a life insurance policy.