Everyone has their area of expertise, and in your business you have probably seen what happens when people try to take things into their own hands without the proper experience and training. The same thing happens in the field of estate planning, and sometimes the biggest mistake is pure inaction.
Depending on the form of your assets, your specific objectives and the size and scope of your holdings, the utilization of any number of financial instruments may be called for. The key is to tap into the appropriate expertise so that you get the proper guidance. This is even true if you consider yourself to be financially astute in your own right.
There are multiple different types of trusts that are commonly used in estate planning that serve different purposes. For example, you can remove the value of your home from your estate by placing it into a qualified personal residence trust. The act of funding the trust would be considered a taxable gift, but the taxable value of the home would be reduced by the interest that you retain in it while you continue to live there. In the end, this taxable value will be far less than its fair market value.
Generation-skipping trusts are also useful. If you were to leave money to your children and they were to leave that same money to their children, the estate tax could be levied twice. This cycle can be mitigated by the creation of a generation-skipping trust that allows your children to benefit from the assets in the trust without actually owning them. Your grandchildren inherit the assets upon the death of your children and this transfer is subject to the generation-skipping transfer tax, but two generations benefited from the resources and only one round of taxation was imposed.
These are just a couple of quick examples, but as you can see trusts can provide tax savings. The best way to explore all your options is to identify an experienced estate planning attorney that you feel comfortable working with and resolve to review your estate plan on an ongoing basis to make sure that you are optimally prepared at all times.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
- Documents Needed for Estate Planning - May 22, 2019
- Will Medicaid Pay for In-Home Care? - May 15, 2019
- What Is Elder Law? - May 8, 2019
