Don’t Pay More Capital Gains Tax Than You Should!
USE THIS ESTATE PLANNING LOOPHOLE TO SAVE
There are plenty of estate planning maneuvers, but when done without the guidance of an attorney, these techniques may end up costing your family a fortune. One action that can do more harm than good is transferring your assets into your children’s names. While it might seem like you’re helping them, they could miss out on a significant tax break: step-up in basis. What is the step-up in basis loophole? When you want to transfer a physical property or stocks into your child’s name, they will often need to pay a substantial capital gains tax. The value of these assets increases over time, and when you transfer them to your child, they will have to pay tax on all the appreciation, or the increase in value, from when you first purchased the property to the sale date. Regarding homes, the value can significantly increase over just a few decades. After two decades, the home’s appreciation can easily be hundreds of thousands of dollars. As a result, they could be left with little profit after forking over the capital gains tax.
Meanwhile, if your child were to inherit the property after your
passing, they would only need to pay the capital gains tax from the market value at the time of your death instead of when it was initially purchased. The basis
of the asset’s value is stepping up in time to adjust the appreciation value. That’s why it’s called a step-up in basis! The result? Your child will save on expensive taxes and start building wealth with this property’s profit. Instead, try putting your assets in a living trust. So, how can your child take advantage of the step-up in basis? You can put your assets in a living trust and add them as a beneficiary. Instead of being considered an owner, your child will only inherit your estate after your death. While a living trust has plenty of benefits, you should always consult an attorney to understand if this is the right move for you, your specific assets, and your children.
Money Mastery: Mark Cuban’s Essential Guide to Financial Freedom
5. Invest up to 10% of your savings in high-risk investments: Investing up to 10% of your savings in cryptocurrency or other high-risk ventures is okay. Do not expect a return on this investment, though. It’s better to assume it’s already gone than to expect you’ll strike it big. 6. Buy consumables in bulk and on sale: You are going to use products like toothpaste, toilet paper, soap, and others daily. Buy as much as you can whenever these items go on sale so you don’t need to buy them at full price in the future.
Mark Cuban is one of the most well-known American businessmen of the past 20 years. He’s one of the stars of “Shark Tank,” owns the Dallas Mavericks, and has his hands in various other profitable ventures. Cuban is not shy about sharing the secrets to his success. Here you’ll find nine of his most valuable pieces of financial advice. 1. Live like a student: When you were a student, you probably wanted to buy many things but couldn’t afford them. Now that you’re an adult with money to spend, don’t waste it on things you don’t really need.
2. You shouldn’t use credit cards: Credit cards can be dangerous, as the ill use of one can quickly send you into debt.
7. Negotiate using cash: Most people don’t mind selling their products or services for less if they know they’ll get cash immediately.
3. Save six months’ worth of income: How long could you live off your savings if you lost your job today? The future is unpredictable, so it’s essential to create a safety net if the unexpected were to happen. 4. Put savings into an SPX mutual fund: You want to keep your money where it will grow on its own. Investing in the S&P 500 will keep your money safe while bringing in additional interest.
8. Read books: There’s always something new to learn that can help you become more profitable or financially aware. Read books that will inspire you. 9. Being nice earns a good response: People respond better to kindness than anything else. Be friendly to those around you, and you’ll be rewarded.
2
CHBEF.COM
Made with FlippingBook Ebook Creator