Creating an estate plan is important for Louisiana residents. While the current federal estate tax exemption is quite high, the tax burden can still be an issue for some people. There are, however, a few ways that this can be addressed.
What exactly is lifetime giving?
When the term “lifetime giving” is used, it usually means that a person is choosing to give something away to a loved one. People do this for a variety of reasons, such as wanting to simplify their estate planning process or to help out a struggling family member. In certain states, it is done to help family members and other beneficiaries avoid paying future taxes upon the relative’s death.
Lifetime giving to reduce federal estate taxes
As stated above, a great way to avoid paying high federal estate taxes is to introduce lifetime giving into your estate plan. You can add as little or as many people into the program as you want. However, this will only work if you remain within the annual exemption limit.
The trust pot method
Although you can certainly still give during your lifetime, another way you can ensure that your family members are taken care of after your death is through a trust pot. This trust pot will be available to your beneficiaries whenever they need funds for, say, school tuition, emergencies, or other support. However, there are a few things to keep in mind. One of those is the fact is that nobody knows when exactly they’re going to pass on. Thus a trustee must be appointed during the estate planning process. This trustee will be responsible for distributing funds upon review of the request of your family members.