Nevada residents should avoid the errors made by the late actor James Gandolfini when it comes to estate planning. When Gandolfini died unexpectedly in 2013, his $70 million estate was vulnerable to estate tax. An irrevocable charitable trust is one way of protecting the estate from this type of tax.
One type is a charitable lead trust. This may be set up while an individual is still alive or after the individual’s death. The trust pays an income to the charity for a certain amount of time and then reverts to the beneficiary or back to the owner. Its purpose is to reduce the value of the estate so taxes will be lower. There is a tax on the charity’s interest income that has to be paid by the trust owner.
Another option is the charitable remainder unitrust. Also known as a CRUT, this provides an option of earning money as well as donating to charity. A CRUT is a way to avoid capital gains tax on the sale of an asset that is highly appreciated. A trustee, a charitable beneficiary, the trust terms and the amount paid to income beneficiaries must all be named.
People who are starting to think about how their assets will be passed on when they die may wish to consult an attorney who has experience in estate planning matters, as the process can be a complex one even if they do not need to worry about estate taxes. In addition to a will or trust, people may wish to create other documents such as a living will, a health care proxy and a power of attorney. These documents help protect them if they become incapacitated and provide information regarding their wishes for end-of-life care.