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Careful planning can negate heavy estate taxes

On Behalf of | Jan 8, 2014 | Wills

One of the good things we do in this life is to instill values in our children; values we hold dear and want to see passed on to future generations.

Parents also often want to pass on to their children the assets they have accumulated in life. With careful estate planning that can include elements such as a carefully constructed will or a trust (or both), Fullerton parents can see to it that their children receive their inheritances.

While there are politicians and others arguing that estates should be taxed in ever greater amounts, experienced attorneys are familiar with the legal tools that can ensure the safe transfer of assets.

For instance, taxes can currently lop as much as 40 percent off of large estates after an exemption of $5.34 million this year. While that might well sound like a disproportionate share for the government to take, tools exist that can protect those assets.

An example of such a tool is the grantor-retained annuity trust (GRAT). The trust can pass on increases in assets (real estate, stocks, bonds, etc.) tax-free, thereby transferring wealth from one generation to the next.

The Tax Policy Center points out that estate planning is protecting many large estates: the average tax payment on large estates will be at an effective tax rate of 16.6 percent rather than the government’s plans to take 40 percent.

That means that for an estate worth $22.7 million, the tax paid will actually be $3.8 million rather than $9.08 million.

Because protection of assets is so important to so many parents, it’s crucial to talk and work with an experienced attorney with a record of successfully helping people guard their children’s futures.

Source: Bloomberg, “Look How Easy It Is to Game Estate Taxes,” Dec. 17, 2013


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