The Need for Advanced Estate Tax Planning

Often, a client (or more likely, a prospective client) will say something like:

"Oh, I don't need estate planning, I already have a living trust."

Our response is always the same:

"While a living trust is the foundation of your estate plan, it is far from the end of the Estate Planning process. In fact, it is more accurately described as the beginning of the Estate Planning process."

In this section, we will address primarily the planning issues that surround the Federal Estate Tax, as well as some advanced estate planning strategies that can help bring your estate under the applicable estate tax threshold.

Estate Tax Planning

As we discuss in our article, Is the Estate Tax Dead? Yes (and No), the Unified Credit Amount - that amount that is excluded from Estate Tax calculations - rises from $2 million per spouse in 2006 to $3.5 million in 2009. In 2010, the Estate Tax is completely repealed, but in 2011, the Estate Tax is reinstated at 2002 levels. This means that the maximum estate size that will escape Federal Estate taxation is $2 million for a couple, and $1 million per individual!

This means that, unless you have a Magic 8-Ball that will tell you of the exact date of your passing, you will need to do plan your Estate for the likelihood that the Estate Tax will be in effect.

Advanced Estate Planning Strategies

Assuming that the Estate Tax is in effect in the year of your passing, what are some planning methods that you can implement today that will reduce the likelihood that your estate will be subject to the Estate Tax?

Important Note

It is important to understand that each of the strategies discussed below has advantages and disadvantages. Their impact on a client's estate may vary widely, due to the individual and unique nature of each estate. Accordingly, it is impossible to specify in advance which is the correct technique for you.

We invite you to meet with one of our attorneys to discuss your Estate Planning needs in greater detail.

Please click on a link below to learn more about Advanced Estate Planning techniques.