Advanced Estate Planning
There are a variety of “advanced” or “sophisticated” estate planning devices which estate planners can employ for the purpose of reducing, or entirely eliminating in some cases, the federal estate tax which an individual’s estate must pay on his or her death. The common elements among all of these techniques are (1) making value “disappear” in the individual’s estate by means of the valuation reduction (“discounts”) created for the assets in the individual’s estate, (2) shifting growth, and sometimes, income out of the wealthier family member’s estate, (3) leveraging the benefit of discounts and the lower gift tax rate on gifts made, and (4) exempting assets and growth on these assets forever from estate and generation-skipping transfer tax.
Many of these techniques offer advantages beyond transfer tax savings, e.g. satisfying an individual’s wishes to benefit charities, fostering the orderly transfer of the family business or ranch to family members, protecting beneficiaries from creditors and angry spouses, and more.
Included in the following list of techniques is the “Bypass Trust,” which is common place today among spousal estates of more than $1,000,000 in value so that some estate planners would hardly consider it an advanced planning technique. Nevertheless the use of a Bypass Trust at the death of the first spouse to die can yield a significant amount of estate tax savings (at least $1,730,800 and often considerably greater) to the total family estate. The Bypass Trust only can be used in the estates of married individuals.
Many of these techniques offer advantages beyond transfer tax savings, e.g. satisfying an individual’s wishes to benefit charities, fostering the orderly transfer of the family business or ranch to family members, protecting beneficiaries from creditors and angry spouses, and more.
Included in the following list of techniques is the “Bypass Trust,” which is common place today among spousal estates of more than $1,000,000 in value so that some estate planners would hardly consider it an advanced planning technique. Nevertheless the use of a Bypass Trust at the death of the first spouse to die can yield a significant amount of estate tax savings (at least $1,730,800 and often considerably greater) to the total family estate. The Bypass Trust only can be used in the estates of married individuals.
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