The Maximum Allowed May Be Too Much For Some

Can you really ever have too much of a goodthing? When it comes to the estate and gift tax exemption amount, many heirswould be thrilled when $5.25 million is up for grabs. How could that be toomuch of a good thing? But parents have a different answer; some believe that $5.25million is just way too much of a good thing to leave as inheritance to theirchildren.

None other than the venerable Wall Street Journal explored this subject inan article appropriately titled “CanYou Trust Your Kid With $5.25 Million?”

As you likely are well aware by now, the recently enacted AmericanTaxpayer Relief Act of 2012 (ATRA) sets the unified estate and gift taxexemption at $5.25 million per taxpayer (with a nearly “automatic” $10.5million per married couple). Using certain estate planning “tools” (e.g., tomake “discounted” wealth transfers) you can do a great deal better than that,too.

So, what do you think about leaving a large inheritance to yourprogeny? By default in most jurisdictions, your children would inherit theirinheritance outright without any restrictions, guidance or protection at age 18(or immediately if already older than age 18). If that is not enough motivationto make proper estate plans now, then little may do the trick.

Proper estate planning means providing the legal means to both protectthe inheritance “for” and “from” your descendants. Have you ever noticed thatsome children “grow up” and others just “get older”? Accordingly, your planningshould reflect the unique needs of each of your children. While you are at it,perhaps you might want to make provisions directly for your grandchildren. Manygrandparents say had they known how much fun grandchildren are, they would havehad them first!

When you make financial arrangements for your heirs, be prudent in yourdecision so that the inheritance is a blessing and not a curse.

We've said it before, proper planningstarts with a thorough understanding of your needs, goals, dreams andaspirations. It takes into account your Values not just your Valuables. Itstarts with a thorough understanding of your family – those who you care aboutand who will someday receive the benefits of your success – and your family'sdynamics. Let's work together to implement an estate plan that works for you. Remember,good planning is no accident.


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