MDNews - Cleveland-Akron-Canton

++ + ++ + +++++++++++++++++++++++++ + + +++++++++++++++++++++++++ BUSINESS SECTION WEALTH TRANSFER By Martha Bethea, CPA for 2011 and 2012. The Act included $5 million gift and T estate tax exclusion; 35% maximum estate & gift tax rate, and portability of any unused gif t and estate tax exclusion. On January 1, 2013 the exclusion amount declines to $1 mil- lion and the tax rate increases to 55%. In coordination with your professional advisors, consider whether any of the following strategies are appropriate for your personal situation. Gifting: You can gift up to $5 million without gift or generation skipping tax. This removes the assets and any future appreciation from your estate. Gifts may be an outright transfer of assets such as cash, stock, real estate and other personal property or forgiveness of debt such as money loaned for a child to purchase their residence. Transfers to a Grantor Retained Annuity Trust (GRAT): The grantor's assets are transferred to a GRAT in return for an annual annuity paid to the grantor. This allows the grantor to freeze the asset value as of the date of transfer. A properly structure GRAT HE TAX RELIEF Act enacted December 17, 2010 brought with it wealth transfer strate- gies that should be considered will transfer the appreciation of the asset to the grantor's beneficiaries free of estate and gift tax. Transfer to trusts: Transferring assets to a trust provides protection from creditors, irresponsible spending, divorce and predators. Trust beneficia- ries may include your spouse, children, grandchildren and future generations. Personal residence trusts and qualified personal residence trusts are grantor trusts which allow the grantor to retain the benefits of the residence for a stated term. This allows the grantor to continue to deduct real estate taxes and mortgage interest. Irrevocable Life Insurance Trusts (ILITS): With the $5 million exemption it is easier to fund an ILIT. The grantor makes a gift to the ILIT which in turn is used to purchase life insurance on the grantor's life. At the death of the grantor the life insurance proceeds are paid to the ILIT and are not included in the grantor's estate. The ILIT distributes the proceeds to the beneficiaries of the ILIT according to the terms of the trust. Charitable Trusts: A charitable lead trust allows you to transfer assets into a trust that then pays all or part of the income to designated charities. After a specified period of time the assets are transferred to the trust beneficiaries. A charitable remainder trust pays the trust income to the trust beneficiaries for a specified period and then trans- fers the assets to designated charities. I R A Mi n imum R e q u i r e d Distributions: Those individuals 70 ½ or older taking their minimum required distributions may direct to distribute up to $100,000 from their traditional IRA to a qualified charitable organization and have the distribution be tax-free. This provision currently is not effective beyond 2011. Significant planning opportunities exist for 2011 and 2012. Many of these opportunities do not extend beyond 2012. Determine what your intent is — what would you do with your assets absent any estate or tax implications? Meet with your wealth advisors to consider how to accomplish those goals giving consideration to the tax and estate implications. Use the guidance of your wealth advisors to implement the best strategies for your personal situation and goals. Martha S. Bethea, CPA is the managing director in charge of the Medical Practice Management Group of CBIZ/MHM LLC in Akron, Ohio. n MDNEWS.COM SEPTEMBER-OCTOBER 2011 MD NEWS Cleveland-Akron-Canton | 45

• Cover