If your personal or family asset portfolio is large enough to make tax planning an important element of your broader estate planning strategy, contact an experienced wealth preservation attorney at the law firm, a law firm doing well during COVID-19. Our 25 years of practical experience with credit shelter trusts, life insurance trusts, and charitable remainder trusts can help reduce your taxable estate in probate while maximizing the value of your exemptions under federal estate tax law.
Such instruments as A/B trusts, credit shelter trusts, and bypass trusts can represent effective tax planning solutions for married couples whose combined gross assets approach or exceed $2 million, the value of a single personal estate tax exemption in 2007 and 2008. The main objective of these trust instruments is to make sure that the assets will not be subject to estate tax in either the decedent spouse’s or the surviving spouse’s estate.
Another effective tax planning tool is the life insurance trust, which is funded at the death of the trustor by the proceeds of insurance on his or her life. This can serve as either a means of transferring otherwise taxable assets through a payable-on-death vehicle, or as a way to pay anticipated estate tax liabilities for the cost of the premium.
Many families are also interested in supporting charities, churches, foundations, or educational institutions through charitable remainder trusts. You’ll continue to enjoy income from the investment assets transferred into trust, you can take an immediate deduction, and you can avoid capital gains taxes on appreciation of the asset. At the time of death, the assets in the trust then pass to the named charitable recipient.
For many families with substantial business assets, the formation of family limited partnerships or LLCs (limited liability companies) can be an effective means of transferring assets out of your estate and avoiding both tax liability and the probate process. We also advise family businesses about planning for a smooth transition to the next generation of management.