February 15, 2013
The estate and gift tax imposes a tax on assets an individual owns at death and assets gifted during life in excess of the exemption amount. Gifts and estates in excess of the exemption amount were subject to a federal tax ranging from 35-45%. The exemption amount has fluctuated dramatically in the last decade making estate planning difficult as we generally do not know the exemption amount for the year in which death occurs. Also, the exemption amount was personal meaning it could not be transferred between spouses and was a use it or lose it proposition. (more…)
April 6, 2012
Fractional share interest discounts are a relatively simple technique to reduce the taxable estate. Fractional share interest discounts work well where an estate is only slightly above the lifetime estate tax exclusion or as a first step to reduce an estate greatly in excess of the lifetime exclusion. Fractional share interest discounts are generally used to reduce the value of real property or business interests. (more…)
March 1, 2012
A qualified personal residence trust (QPRT) is an estate planning tool utilized to transfer assets out of a wealthy individual or couple’s estate in order to reduce or eliminate the amount of estate taxes due upon their death. A QPRT operates by an individual or couple transferring a personal residence into a grantor trust while continuing to enjoy the use of the residence for a specified number of years before the residence transfers to the children as beneficiaries. The QPRT results in the gift tax being calculated at the time of the transfer upon the value of the remainder interest. The value of the remainder interest is less than the present value of the residence because the residence is not transferred to the children until the set number of years expires. Without the QPRT, the transfer of the residence may be subject to estate taxes on the full appreciated value of the home upon death. (more…)
February 9, 2012
The family limited partnership (FLP) and the limited liability company (LLC) are excellent estate planning techniques to reduce the taxable estate. The estate planning advantages of the FLP also apply to the LLC so this article will simply refer to FLP’s for clarity. A FLP is a limited partnership comprised of family members. FLPs have become very popular during the last few years because the valuation discounts of FLP assets have been so substantial. (more…)
December 22, 2011
Lifetime gifting is a simple but surprisingly effective way to reduce the value of an estate. Every person has a gift tax exemption of $5,000,000 which allows for the transfer of gifts up to this amount during life without incurring any gift tax. Even gifts made in excess of the $5,000,000 gift tax exemption may have beneficial tax results because the payment of the gift tax is preferable to the payment of the estate tax. (more…)
November 3, 2011
A grantor trust is established by the grantor irrevocably transferring property to a trust during his or her lifetime while retaining an interest for a number of years with the remainder to the beneficiary. The remainder interest to the beneficiary is subject to gift tax and its value is ascertained per the tables provided by Internal Revenue Code Section 7520. (more…)