Indianapolis estate planning lawyers are always going to emphasize the fact that every case is different and it takes experience and expertise to craft a plan that is ideal in light of your unique circumstances.
Tax considerations are always going to be of tantamount importance because the federal estate tax and the gift tax with which it is unified carry quite a wallop. At the present time the rate of the gift/estate tax is 35%, and this is no small nibble.
But at the end of this year the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 is scheduled to expire and at that time the rate of the tax is going up to 55%.
With the above in mind you have to do what is necessary to transfer assets intelligently to mitigate your tax exposure. Facebook founders Mark Zuckerberg and Dustin Moskovitz apparently did just that according to a recent Forbes piece.
They utilized something called the zeroed out GRAT strategy. A GRAT is a grantor retained annuity trust, and the way that it works is that you as the grantor receive annuity payments out of the trust. You do however add a beneficiary who would assume ownership of any remainder that existed after the trust term expires.
The act of funding the trust is considered to be a gift by the IRS and as such it is taxable. Estimated interest is accounted for utilizing the Section 7520 rate.
You zero out the GRAT by taking annuity payments equal to the entirety of the taxable value of the trust, retaining all of the interest.
But if the securities that you used to fund the trust appreciate beyond the IRS estimate, there will be a remainder, and it will pass to the beneficiary free of taxation. In the case of Facebook shares prior to an IPO this is the penultimate example of a successful zeroed out GRAT strategy.