Estate Planning

The goal of estate planning is to minimize the IRS estate transfer tax that is imposed on significantly sized estates. Most estate planning tools are designed to accomplish one or more of the following:

 

  • Eliminate unnecessary taxes on the estate
  • Minimize unavoidable taxes and settlement costs that the estate will incur
  • Position the estate for maximum flexibility to take advantage of any future tax law changes
  • Create the liquidity needed to pay any transfer taxes in the most cost-efficient method

Below are some frequently used estate planning tools and techniques:

I. Eliminate

II. Minimize

III. Liquidity

  • Will
  • Living trust
  • Unified credit bypass trust
  • Irrevocable life insurance trust
  • Charitable planning
  • Charitable remainder unitrust
  • Charitable lead trust
  • Gifting combinations
  • Outright gift
  • Annual exclusion
  • Purchase techniques
  • Installment sale
  • Private annuity
  • Self-canceling installment note
  • Buy/sell agreements
  • Discounting opportunities
  • Family limited partnership
  • Grantor retained annuity trust
  • Grantor retained unitrust
  • Life insurance
  • IRC 6166
  • IRC 303 redemption
  • Zero coupon bonds


Other tools such as the Qualified Terminal Interest Trust (QTIP) are available to maintain control of assets, either after death or during a lifetime.

Note: A trust is a legal arrangement that may result in the inability to change the trust in the future, requires relinquishing control over the trust assets, must be properly administered, and has other significant consequences.  Before implementing any plans based on your specific circumstances and objectives, you should consult with your personal legal, tax, and financial advisors.