COVENANT BUSINESS PLANNING SOLUTIONS

Passing Wealth to your Spouse or Children

Before we leave our discussion of controlling access, there is one additional planning consideration we should mention. Under current estate tax law one spouse can leave assets at his/her death to the other spouse without estate tax consequences. For most estates, taxes are assessed only at the death of the surviving spouse. 
 
If, during their lifetimes, parents are able to give their children (and other heirs) as much wealth as they wish the children to receive, it is then possible to design an estate plan that gives the balance of the wealth at the first parent’s death to the surviving parent. When the surviving parent dies, his/her loved ones (yes, your children!) will have received (during that parent’s lifetime) all of the wealth the parents wanted them to receive and the balance of the estate can be transferred to charity at the second parent’s death. Some families establish private foundations or give money to other charitable organizations with the following result: 
 
The children receive what the parents want them to receive—during the parents’ lifetimes; 
The parents enjoy 100 percent of the wealth remaining as long as either parent survives; 
After both parents die their wealth transfers to a charity of their choice—such as their own private foundation. 
And last, but not least, 
• The IRS gets nothing! For many parents and business owners this is an estate plan design worthy of close scrutiny. For George Delveccio (our fictional business owner), a man with strong charitable interests, this was the estate plan design that he chose to implement.
Read on for our next blog in this series about the tools to maximize the estate and gift tax consequences of transferring wealth.