Meaning of Advanced Eatate Planning
This is something more than a simple will or basic living trust can be critical for people with valuable, taxable estates. It goes above and beyond a basic foundation and provides options for minimizing or even eliminating estate taxes. Advanced estate planning can be used to perpetuate family values and protect assets for the benefit of future generations.
However we say Advanced estate planning typically involves estate tax reduction, Medicaid planning and/or special needs trust planning.
Tools for Advanced Estate Planning.
Advanced estate planning tools are most commonly used to take advantage of the nuances of the various tax laws in ways which maximize your ability to recognize your goals while minimizing the taxable consequences for you and your beneficiaries. Within this elite realm of estate planning, several dominant categories consistently emerge.
These categories are not mutually exclusive, and some tools can fit into more than one class. Nevertheless, these are an adequate method to organize the discussion.
1. Tools to benefit charities and preserve wealth.
Giving to charity, in life or upon your death, is an easy task. Charitable contributions can be deducted from your income taxes, and are typically free of gift taxes or estate taxes. The tricky part is to find a way to donate assets for charitable purposes, and obtain tax benefits, while still preserving assets for yourself and/or your family to benefit from. These seemingly separate purposes can exist in a symbiotic way, actually enhancing the power of each through the use of several available methods.
- Charitable Remainder Trust:
- Charitable Lead Trust:
- Gift Annuity:
- Advised Funds:
2. Tools to benefit future generations
Many people with sizable estates, or sizable estate goals, do not want to simply leave money to their children. Instead, they wish to see their assets applied for several future generations, or use the money to teach their heirs how to run a business. These needs can be met with proper estate planning.
3. Tools to boost the value of gifts to family
For a person or couple with a very sizable estate, the available exemptions and deductions may not be large enough to protect a satisfactory amount of assets from Estate or Gift taxes. One way to address this is to ‘shrink’ the value of the assets when they have to fit through the applicable tax exemption, and permit them to return to their full benefit thereafter in the hands of your beneficiaries.
Advantages of Advanced Estate Planning.
It can reduce Estate Taxes
You can reduce or even eliminate estate taxes by gifting assets into an irrevocable trust for eventual transfer to your beneficiaries or even to charities. But the trust must be irrevocable. A simple revocable trust will allow your estate to avoid probate, but the Internal Revenue Service takes the position that you still own the assets you place into such a trust. You can revoke the revocable trust entity and take the assets back at any time. You remain in control of them.
It can create a Legacy
Different types of trusts can be established to create an ongoing legacy for future generations as well. Many states allow trusts to continue for hundreds of years or even into perpetuity so you can establish dynasty trusts for their current and future family members. You can also create a legacy in your community by setting up charitable trusts or a private foundation that will provide a self-perpetuating endowment for years to come.
Advanced Estate Planning Can Keep Assets Safe
For those who have accumulated even minimal wealth, the fear of losing it all in a lawsuit can be a great concern. Some professions are more prone to lawsuits than others and, of course, accidents can happen. Many advanced trusts such as spousal lifetime access trusts (SLATs) not only help to minimize or eliminate estate taxes but offer the added bonus of protecting the assets owned by the trust against lawsuits and in the event of divorce. Again, the trust must be irrevocable. What you no longer legally own is not accessible.
Get help
If you would like to know or learn more information about the necessity of an advanced estate planning, any one of our estate planning attorneys would be happy to assist you, Contact us today.
