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.
OUR NEW BUSINESS DEVELOPMENT COORDINATOR GET TO KNOW DAEJAH!
A common characteristic you’ll see among estate planning professionals is that they have a strong desire to help others. Some of us have faced our own probate horror stories that led us to the field, while others learned how much of a difference they can make in others’ lives through estate planning. Every team member does everything possible to help our clients meet their estate planning needs. We brought our former receptionist, Daejah, back to our team a few months ago as our new business development coordinator. Daejah joined our team with a wealth of experience working in various fields. After working in a few different industries, Daejah decided to start her own business called Fire and Desire, where she made all-natural soy candles. In October 2021, Daejah, unfortunately, lost her little sister. She stopped making candles and began looking for a career where she could assist other people and make a difference in their lives. She learned about Shoup Legal, researched, and chose to work with us after learning about our efforts to help our clients.
our clients. She’ll regularly connect with clients to answer any questions and ensure
their estate plans are still up-to- date. She’s also working diligently to connect with other businesses in the community so we can build a network of trustworthy professionals for you in case you need something outside our scope of services. Daejah keeps herself exceptionally busy while away from work. She’s currently studying real estate at MSJC. Daejah is passionate about food and loves to cook new cuisines. She also enjoys music and would have no problem listening to her favorite songs every hour of the day. When she’s not enjoying her favorite hobbies, you will likely find her spending time with her family and her energetic puppy, Oswald.
When we experience change in our lives, we’re not always quick to update our estate plans. Thankfully, Daejah is here to provide guidance and assistance to
We’re so excited to have Daejah back on the team and can’t wait to see what the future holds for her!
Plan today for peace
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