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Complex gifts through trusts need to be done right

Right now, Americans have an opportunity to pass on a gift of inheritance to their heirs, tax free up to the large sum of $5.12 million, and a lower tax rate than normal on any amount after that. However, according to The New York Times the time to take advantage of this large tax break is running out. Some people might fear that giving such a large gift to their children can have some unintended consequences.

By using estate planning people can often pass on property and assets, including money, in a way that is more comfortable to them. Using a trust, people can often set up how much money an heir gets and at what time they get the money or property. Trusts can help people take advantage of a tax break such as this, while still allowing people to safeguard their own lifestyle.

According to a New York Times article, it is important that these trusts be set up carefully, and no detail be missed. One mistake could result in adverse tax consequences and many times larger sums of money are more heavily scrutinized by the Internal Revenue Service. The report indicates that any gift given under this tax break needs to be irrevocable.

An experienced estate planning attorney can help make sure trusts are set up correctly to avoid these unintended consequences. They can help parents give gifts to their children while protecting their own lifestyles to help ensure they don't run out of money in their lifetime's because of a gift they gave their children.

Source: New York Times, "To Give or Not to Give, Up to $5.12 Million," Paul Sullivan, June 22, 2012

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