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New Study Shows that Retirees Give Adult Children up to $6800 Every Year

June 7, 2017

Filed under: Gift Taxes — Neel Shah @ 9:15 am


Under the gift tax, certain amounts of money can be given as an individual or as a married couple without the consequences of direct taxes. Whether this was a formal part of your estate plan or not, it can be one way that you help to support children as well as move assets outside of your estate while you’re still alive. adult children and retirement

If you have a plan to pass on assets to your loved one, you may be eligible to take advantage of the gift tax exclusion and pass on assets while you’re still alive to minimize the potential complications and tax ramifications. It turns out that one study recently conducted by Merrill Lynch indicates that up to 48% of Americans at least aged 50 will overextend themselves financially in order to assist adult children with living a more comfortable life. The average amount the retirees are giving to their adult children is $6,800 per year.

Of those individuals who were passing on money to their loved ones while they were still alive, nearly 80% of them felt that it was the right thing to do. Half of those retirees felt that giving money to family members was something they had an obligation to do. When compared with other family members, it was the adult children who came out receiving the most from a retired loved one when compared with parents, siblings and grandchildren. If you have intentions to pass on assets to a future generation or if you have questions about the best strategies for doing so, you need to consult with an experienced estate planning attorney as soon as possible.

Various strategies can help you accomplish all of your estate planning goals, even giving to adult children in a way that is responsible and minimizes tax consequences.

Looking for a new charitable gifting idea? Try Bitcoins

June 6, 2014

Filed under: Gift Taxes,Gifting — Neel Shah @ 3:03 pm

The IRS is never too far behind the trend when it comes to new forms of tax revenue, and with their recent tax stipulations regarding virtual currency, it’s time to consider the charitable giving opportunities with Bitcoins. The IRS specific rules relate to any virtual currency that is used to pay for goods or services or those that are used for investment, so Bitcoins isn’t the only possible form, but it’s certainly the most popular.

Looking for a new charitable gifting idea Try Bitcoins
(Photo Credit:

What’s important from an IRS perspective is that the sale or exchange of Bitcoins and other types of virtual currency could signal a taxable event or tax liability. It’s treated as property under IRS regulations and an owning individual must consider the fair market value in computing their gross income. There are several different ways that you might think about gifting in terms of Bitcoins, so here are some ideas and the possible tax consequences:

  • Outright gifts held long term to a public charity: Considered a fair market value contribution, deductible up to 30 percent of adjusted gross income.
  • Outright gifts if the donor is a creator/miner of Bitcoins: This could be considered ordinary income and not property under “capital gains”. Up to 50 percent of AGI deductible at cost basis.
  • Outright gifts held short term to public charity: Cost-basis contribution, meaning that this is deductible up to 50 percent of AGI.
  • Substantiation with receipt: The donor requires a receipt describing the gift here and it’s treated like all gifts of $250 or more.
  • Substantiation with appraisal: Form 8283 and a qualified appraisal is required here.

To learn more about gifting strategies, reach out to us at or contact us via phone at 732-521-9455 to get started.

It’s Good Enough for Walmart: Tax Avoidance with a GRAT

February 6, 2014

Filed under: Estate Taxes,Gift Taxes,Gifting,GRATs,Trusts — Neel Shah @ 9:00 am

Billionaire Sheldon Adelson is not alone in his disdain for estate taxes. As one of the world’s richest men, Adelson has the ability to hire top attorneys and advisors to employ financial and estate planning tools that ensure his estate pays little or no taxes. One of these tax avoidance tools is the Walton grantor retained annuity trust (“GRAT”). A recent article discusses the use of this popular trust.

Walmart exteriorcropped

(Photo credit: Wikipedia)

Named after Walmart heir Audrey Walton, the Walton GRAT is a popular tool used by the wealthy to avoid estate taxes. Essentially, a Walton GRAT works by rapidly transferring large quantities of stock into a trust fund that requires that the initial investment be returned after two years. If the stock gains value while in the Walton GRAT, the additional value will be left over in the trust. The trust can then transfer the remaining value to a third party without incurring gift tax liability.

Recognizing this loophole, the government sued Audrey Walton for using a similar scheme in 1993. The court ruled in Walton’s favor, thereby legitimizing and nicknaming the Walton GRAT. Since then, many wealthy individuals – such as Facebook chief executive Mark Zuckerberg and Goldman Sachs chief executive Lloyd Blankfein – have benefited from their own use of the Walton GRAT.

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How to Plan for, or Avoid, Transfer Taxes

December 12, 2013

Filed under: Estate Taxes,Family Limited Partnerships,Family LLCs,Gift Taxes,Inheritance Taxes,Life Insurance,Trusts — Neel Shah @ 9:00 am

As a recent article suggests, estate planning encompasses a lot more than most people would think. Not only does estate planning allow you to structure the final distribution of your assets upon your death, but it also allows you to provide for the management of your assets during life, plan for the care of your children, and make important decisions about what kind of medical care you would like to receive at the end of your life. Although estate planning encompasses all of these things, most people come to the table with an overwhelming goal of avoiding transfer taxes, namely Estate Taxes, Inheritance Taxes and Gift Taxes.

There are plenty of ways that estate planning can be used to minimize the tax liability an estate will face after the owner’s death. In many situations, it is possible to plan for zero estate taxes. Some strategies involve giving up control of certain assets. For example, a person could zero out their tax liability by setting up a charitable trust. Others, such as Family LLCs (FLLCs) and Family Limited Partnerships (FLPs) allow owners to maintain more control..

For the ultra-wealthy, there are many sophisticated asset transfer mechanisms that can be used to avoid transfer taxes. These mechanisms include foreign grantor trusts, dynasty trusts and private placement trusts. Again, these mechanisms often mean that a person has limited or no access to the assets within the trusts.

For those who want to maintain full control of their assets, life insurance is another way to provide money for anticipated taxes. These policies are often used to provide quick cash for a person’s heirs to pay any taxes and fees on the estate.