Webinar: Leaving a Legacy – Q&A
Blair Braden, CFP®
For the full content, watch the recorded webinar here or address the estate planning action items here.
Q: What was the term “springing for power of attorney?”
A: It’s called a “springing provision,” which allows you to establish specific controls that state when a power of attorney comes into effect.
Q: Is it a requirement to give the annual $15,000 gift tax to a relative?
A: No. Based on the current tax code, you can gift up to $15,000 to anybody per year without tax consequences. The allowable amount of $15,000 is per individual; thus, if you are married, you can gift up to $30,000. That is where the “split gifting” option on your tax return comes into effect.
A side note regarding gifting: you can frontload a 529 college savings account with up to five years of contributions (gifts) as long as you do not make any further contributions to that account over the following five years.
Q: Does the recipient of a gift pay income tax?
A: If you gift within the limit of $15,000, neither party will incur a tax penalty.
Q: What if you want to donate $25,000 as an endowment to a college in honor of your deceased spouse’s memorial?
A: You can certainly do this; often, however, endowments will have minimums closer to $100,000. If you want to contribute but cannot meet the minimum endowment criteria, you can explore gifting opportunities as well.
In this scenario, you must make specific considerations. For instance, if you are donating to a public institution, you may be able to give the full $25,000 (in one lump sum) and receive a tax deduction. If it’s a private institution, however, you may run into potential barriers regarding the tax benefits.
Another potential route is establishing a scholarship for the university of your choice in your late spouse’s name.
If you have any estate planning or long-term financial planning questions, let us know—email thepartners@denverwealthmanagement.com.
Disclosures
The opinions voice in this material are for general information only and are not intended to provide specific advice or recommendations to any individual.
All investing includes risk including the possible loss of principal. No strategy assures success or protects against loss.
This information is not intended to be a substitute for individualized tax or legal advice. We suggest that you discuss your specific situation with your tax or legal advisor.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
