What Are the Benefits of Gifting Assets During Estate Planning?

older couple after gifting assets in a trust

When planning for the future, understanding the options available when setting up a trust fund is essential. There are countless options available, so it’s important to understand the primary reason you’d like to establish a fund. If you’re looking to distribute assets to beneficiaries and charities alike, working with a Woodland Hills charitable planning attorney to set up a charitable trust for the purpose of gifting assets may be right for you. Keep reading to explore the benefits of this option.

How Can I Gift Assets to Loved Ones During Estate Planning?

In California, there are two primary kinds of trusts that a grantor can create. These include charitable lead and charitable remainder trusts. Though they sound similar and serve similar functions, there is a significant difference in how these trusts operate.

A charitable lead trust allocates funds to charities over a certain period of time to help cover living expenses or financial goals. Once this time has elapsed, the remaining funds will go to the beneficiaries you designated. A remainder trust sends a stream of income to the creator or inheritors. However, after the creator has passed, the rest of the assets in the trust will go to charity.

Why Should I Consider Gifting Assets in California?

One of the primary benefits of placing assets in a charitable trust is that there are no tax implications. If you choose to establish a lead trust, the beneficiaries who inherit the assets in the fund after the allotted charitable time has passed will face no or significantly reduced taxes on the funds. Similarly, gifting assets allows you to reduce the total value of your estate, which can be a considerable benefit for tax purposes.

There are also a number of benefits associated with setting up either of these trust options. For example, charitable trusts:

  • Help you avoid the capital gains tax you would incur if you sold the assets outright
  • Will rely on the market value of an asset when deducting it for tax purposes
  • Provide upfront tax benefits to the donor
  • Allow you to spread the transfers out over time
  • Let you provide for your beneficiary’s future without liquidating asset
  • Allows you to provide for your loved ones while you are still alive

Generally, you can gift $17,000 annually to a beneficiary without incurring a gift tax or using a portion of the lifetime exemption.

If you’re ready to set up a charitable trust to help support the charities that resonate with you while providing for your loved ones, the Law Offices of Yacoba Ann Feldman can assist. Our dedicated legal team will guide you through the process of setting up a fund to give back to your communities. Contact us today to get started with one of our experienced estate planning attorneys.

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