Transfer Assets When Values Are Low
If you own stock in a strong company with good long term prospects and value, until recently, it might have been very expensive to transfer that stock to children and grandchildren. any transfer over $12,000 ($24,000 for a married couple) could trigger a git tax. Now, with very depressed values (even of strong companies) you may be able to transfer many more share for that same amount of money and avoid estate and gift tax. when the company values rebound, the increases are already out of your estate.
Add trusts for Extra Protection from Tax, Divorce and Creditors
Outright gifts of stock to young children or adults who do not have a developed sense of money management can be a problem. The low value stock might be sold before the value comes back and the proceeds might be used for undesirable purposes. By using trusts you can easily protect the younger beneficiaries and adults who need assistance with money. However, even a mature child or grand child might benefit from a trust designed to protect these assets from divorce and litigation. And, when properly drafted such trusts can also protect the assets from taxation for multiple generations.
Use Your Exemption If You Can
If you want to move even more stock or real estate at the low values in today's depressed markets, you should consider using some or even all of your $1,000,000.00 exemption. Each person (both spouses) has a one million dollar exemption that can be used during life. This means that a couple could conceivably move up to $2,000,000.00 million dollars into trusts for their children and grandchildren. If the stock or real estate is moved at a very low value, then when the stock or assets rebound they could be worth much more and the value of that growth will be out of your estate. Moving assets at discounted values is a powerful wealth preservation strategy used by the wealthy. However, anyone who has assets which exceed the needs of their lifestyle can consider these planning techniques.