How to make a better estate plan
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How to make a better estate plan

| Sep 14, 2018 | Will |

Estate owners in South Carolina have many options when it comes to wills and trusts. In some cases, they will choose to leave a portion of their assets to charity and a portion to their children. If a person chooses to structure their estate plan in such a fashion, it is important to consider the tax implications of how assets are actually transferred.

Often, an individual will include a charity in a will, trust or other estate plan document. While this is perfectly legal, it can also increase an heir’s tax bill. Let’s say that a parent leaves an IRA to their children and another asset for charity. In such a scenario, the child would be required to pay tax on the entire IRA. However, if a portion of the IRA was left to charity, the child would receive the balance and pay less in tax.

It is important to note that this won’t be an issue with a Roth IRA or 401(k). Changing the beneficiary designation can be completed by submitting an amended form to whichever entity the account is through. In most cases, this would be a person’s employer or a brokerage firm. An attorney would then make changes to an individual’s will or trust to reflect the change in plans.

After a person creates a will or other estate plan document, it should be reviewed on a regular basis to determine if it still meets their needs. Reviews can take place after a major life event or on an annual basis, and they may be done with an attorney or other advisers. Taking this step could help to reduce estate taxes.