A recent article published on Yahoo Finance discusses some of the techniques wealthy families use to save on estate taxes.
For most Americans, the tactics of the ultra-wealthy are not needed, but many find it fascinating to examine some of the techniques used by top0notch accountants and lawyers to save help rich clients save big on estate taxes.
Using trusts to give away homes and country houses.
- Qualified personal residence trusts (QPRTs) freeze the value of the real estate property for tax.
- Homeowner puts the property in trust.
- When the trust ends, it is transferred out of the taxable estate and the estate only has to pay gift tax on the value of the property when the trust was formed.
Passing wealth to future generations with trusts that last up to 1000 years.
- The laws on these so called dynasty trusts vary by state, but the idea is that the heirs don’t own the assets, but they have the right to use them and receive income from them.
- This plan can allow the passing of wealth through trusts with a long lasting term.
Charitable remainder trusts.
- The person puts their assets in trust and collects annual payments for as long as they live, and only 10% of what remains in the charitable remainder trust has to go to a designated charity.
- The trust can be funded with a variety of assets from yachts to businesses, making them useful for entrepreneurs looking to help the world and benefit for themselves.
Buying off-shore life insurance policies.
- Private-placement life insurance is used ot pass on assets without incurring estate tax.
- The trust owns the life insurance policy that is created off-shore.
- This one is primarily for the ultra wealthy, as the premiums are often 5 million up front.
Transferring assets when the market is down.
- Grantor-retained annuity trusts can facilitate big savings when the market is down.
- They pay a fixed annuity, so a certain amount during a term such as two years, and appreciation of the asset’s value is not subject to estate tax.
Contact an Experienced Estate Planning Attorney
Most of us are not ultra rich, so the techniques they use may not be applicable to you, but there are many tools available to facilitate successful estate planning even for the average American. At the Law Office of David Knecht, we have extensive experience with estate planning and create a customized plan with you to make sure that your loved ones are taken care of and your wishes are memorialized. Contact us at 707-451-4502.
