Estate Planning Concepts
- Use both spouses’ Applicable Exclusions ($5,000,000)
- Credit Shelter Trust (or outright gift to children)
- Equalize estates of both spouses -- asset titling, beneficiary designations
- Leveraging -- impose transfer taxes on assets at lower value during life than at death
- Insurance trust (or children own insurance)
- Lifetime gifts of assets likely to appreciate (Silicon Valley stock)
- Make gifts outside transfer tax system -- annual exclusion gifts; tuition payments
- Outright to children
- Grandchildren’s trusts
- Avoid assets being subject to estate tax in successive generations
- 3 trust plan under will
- $5,000,000 trust under will
- Take advantage of lower marginal rates -- no marital deduction bequest
- Valuation of assets subject to tax -- discount value (fractional interests)
- Advanced leveraging techniques -- subtraction method (impose transfer taxes on asset value after subtracting value of retained interest)
- Qualified Personal Residence Trust -- subtract value of retained right to use property for term of years
- Grantor Retained Annuity Trust -- subtract value of retained right to annual fixed dollar payout for term of years
- Charitable Lead Unitrust -- subtract value of charity’s right to annual fixed percent of assets payout for term of years
- Tax inclusion versus exclusion -- inter vivos gifts and pay gift tax (survive 3 years)