Understanding the Tax Relief Act of 2010 and its implications on intergenerational wealth transfers.
It is important to understand the most effective ways in which wealth can be transferred. The Tax Relief Act of 2010 brought a variety of legislation that can be used to transfer wealth with minimal tax effect, and realizing how it can be used to benefit your own family planning is critical. With the lifetime gift exclusion rising from $1 million to $5 million, gifting is encouraged, especially considering a couple can give twice that. This can be used advantageously through strategies such as investing this money in irrevocable life insurance trusts, grantor retained annuity trusts (GRATs) or defective grantor trusts. You can also likely secure a lower tax bill by converting a traditional IRA into a Roth IRA while the income tax rate remains stabilized. Speak with your Telemus Financial Life Advisor about exploring these options for your wealth transfer before these generous new limits disappear.