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Helping parents: Creative estate planning provides many options

If you pride yourself on your estate planning knowledge and yet have never heard of an "upward trust," don't take it too hard. Neither have many other people, notes one elder law practitioner, who says that such trusts were "virtually unheard of" even a few years ago.

They are certainly gaining traction now, though, as an aging elder demographic and tough economic times have resulted in increasing numbers of younger family members seeking to assist their parents and older loved ones with their finances and to make ends meet.

Concerned family members with the means to help should immediately know these two things: There are a number of creative and flexible ways in which to help, and the assistance of an experienced estate planning attorney is virtually required to take fullest advantage of them. Skilled counsel in this area will pay off literally and help a provider optimally minimize taxes.

Following are some general things that children can do in the area of parental care, with the caveat, again, that proven estate planning counsel can help identify and implement what makes most sense in a given case. This bears noting: Every family is unique.

  • Annual gifts -- a common strategy, but with limits and potential tax implications
  • Directly paying parents' bills -- medical bills can be paid without limit and do not count against the lifetime gift-tax exemption
  • Intrafamily loans, which have low minimum interest rates
  • The aforementioned upward trust, with parents as beneficiaries, as well as other types of trusts and structured vehicles

The above options are merely a few among many and are presented in simple and abbreviated form here, with, again, each of them containing detail, complexity and implications that should be fully understood through discussion with an estate planning expert.

The bottom line: There are a number of ways to help older family members, and structuring giving with due thought given to taxation and related matters will make it optimally powerful and save money at the same time.

Source: Wall Street Journal, "Paying them back," Julie Steinberg, Feb. 14, 2013

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