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High Net-Worth Planning

The tax laws are changing, and in fact change with some regularity. The present Federal Estate Tax and Gift Tax laws in place are the result of significant compromise between the president and congress extending the "Bush Era Tax Cuts" and avoiding the 2012 "fiscal cliff."  While there is not presently any looking deadlines for the Estate Tax / Lifetime Exemption Statutes, Congress is the ultimate taxing authority and these laws may still be subject to change.

There are many tax strategies available to these clients, but first and foremost is to make sure that if married, both spouses "Lifetime Exemption" is used. Too often, due to a lack of planning, clients will allow the estate to pass outside of a trust to the "surviving spouse" under what is called the Unlimited Marital Deduction.  Married persons (and domestic partners in California) can pass an unlimited amount of property between themselves during life or at death without tax, without probate. When this type of transfer occurs, the first spouse (partner) to die does not use their lifetime exemption and this can go to waste.

However, with the introduction of the Living Trust - a separate legal entity capable of owning property both spouses get to use both of their lifetime exemptions. This benefit is through the use of a Credit Shelter Trust, often referred to as an A-B Trust. This Trust insures the use of both spouse's lifetime exemptions.

Other planning tools may include use of charitable remainder trusts giving highly appreciated assets to charity, while enjoying the income streams they provide for the couple's and the children's lifetimes

Another possibility is to insure adequate life insurance is available, since this asset is realized by the beneficiaries as a tax free asset; it can be used to plan for the potential tax consequences through an Irrevocable Life Insurance Trust.

See us for your planning needs.