Oregon Estate Planning Blog

Mercy Kits - A Great Holiday Gift!

I read about this in Metro-Parent, a Portland parent magazine.  A great gift for the holidays is a "Mercy Kit," which helps do various things for people all over the world.  For example, the Children's Food Kit ($25) helps to meet children's food needs in countries like Niger and Guatemala.  There's a Family Garden Kit ($40) that helps to support families in being self-sufficient by building and maintaining gardens.  There's even a Breastfeeding Kit ($75) that helps to train breastfeeding counselors in Jakarta.  And, if you want to pool money with friends or make a large company donation, the Health Clinic Kit ($2500) helps to build and maintain health clinics in poverty stricken parts of the world.

I think my 9-year-old daughter, Tania, will really love spending money on something like this.

Gifts that actually keep on giving!

I was delighted to find this article that goes through some gifts that are actually really amazingly beneficial for the person receiving the gift.  If you have kids or grandkids and are thinking about a meaningful gift, you might want to look at the article.  Here is the author's list:

1) COLD, HARD CASH - You get to give away $12K per person each year, tax-free.  It's a great way to reduce the size of your estate, and who doesn't love getting money?  As a kid, I always looked forward to my grandparents' generous checks.  (No, they never gave me $12K, more like $50, a lot for an 8-year-old twenty years ago!)

2) SESSION WITH A FINANCIAL PLANNER - I would say that most financial planners I know offer free initial sessions.  Better to pay toward an estate plan or payment on an account or insurance policy.

3) SAVINGS BOND - The author says they're a good way to teach kids about investing, plus, they're pretty.  Please make sure you have the name spelled correctly.  There's nothing more annoying than trying to prove you're the owner twenty years later.

4) BROKERAGE ACCOUNT - This is another fun one for kids, because they can check out the status online and feel like a real big-shot investor.

5) ROTH IRA - This is a great one for your adult child who is earning a paycheck, but makes under $101K.  You can contribute up to $5K a year, but even if you only contributed $10K total, in 30 years the account would be worth around $300K.  Not a bad way to start saving for retirement.

6) 529 COLLEGE SAVINGS PLAN - It's a good time to start one of these, since stocks are so low.  Some of the benefits of these plans are that the donor can control the account and that the distributions are tax-free.

7) CHARITY CHECKS - You get a tax deduction and can pick their favorite charity.  I think a lot of my friends would be touched by something like this, especially my best friend, who is an animal lover.  She'd way rather me donate to the animal shelter she volunteers at then buy her something.

8) ORGANIZE A GARAGE SALE - I think this lady is awesome for coming up with this idea!  My mom would love it if I offered to help her hold a garage sale!  She and my dad are in the process of downsizing from our family home to a smaller condo.

To your family's health and prosperity,

Candice

The benefits of transferring wealth in hard economic times

If you're like me, you're starting to get a little bit nervous about the current financial crisis happening in the United States.  Personally, I worry about whether people will choose to invest money in estate planning when it seems trivial compared to the rising costs of food, gas, and basic necessities.  There are all sorts of rumors and fears going around about this being ten times worse than the Great Depression.  I may start stockpiling food soon.

The New York Law Journal had a somewhat comforting article for people who are worried about their investments:  It's a great time to transfer assets by taking full advantage of the deflated value of assets when it come to using your gift tax exemption: "It may seem counterintuitive to transfer wealth in 'hard times.' Yet, such gifts, especially of undervalued assets, can be highly desirable. If the value of assets is artificially depressed by the current market, utilizing annual exclusions and lifetime exemptions with these assets may make good estate planning sense. Assets are removed from the donor's estate at a deflated value, but the donee realizes the full value when the market recovers." 

Some of the effective estate planning methods are grantor retained annuity trusts (GRATs), sales to a grantor trust, self-canceling installment notes (SCINs) to a grantor trust, and forming family limited partnerships (FLPs).  Talk to your attorney if you think you might benefit from any of these methods.

As the author of the NYLJ article says:  "Given the present economic outlook and looming budget deficits, it will be difficult for Congress to find room in the budget to justify permanent repeal of the estate tax. While it might be difficult to part with wealth in these challenging and uncertain economic times, taking advantage of estate planning opportunities that are available in this type of economy may prove to be a very effective wealth transfer strategy."

A satisfying way to save on estate taxes

An extremely satisfying way to save on estate taxes is to reduce the overall size of the estate by taking advantage of the annual gift tax exclusion.  Each year, an individual may give $12,000 each to as many people as he or she wants, free of the gift tax.  This means a couple can give $24,000 each year to each person.  Here are some ideas:

1.  Gifts to Your Adult Children - What could be more satisfying than helping your adult child to buy a new home or to pay off student loans?  You get to see your gifts enjoyed by your children during your lifetime.  You get to be the person who gives your child this peace of mind.

2.  Gifts to Your Minor Children - This is a great way to save for college, a car, future world travels.  A couple can gift each child $24,000, annually, tax free.  Very specific rules apply to gifts for minors if you want the gift to be tax-free, so consult an attorney before you make these plans.

3.  Gifts to Your Grandchildren - You're actually helping your children and your grandchildren when you make gifts to your grandchildren.  Of course, there are specific rules to qualify for the annual gift tax exclusion, so consult your attorney.