Archive for July, 2010

How To Leave Your Assets Equally To Your Children (But Distribute it to Them Differently).

Thursday, July 29th, 2010

This is a common and effective estate planning strategy.  You can create a separate trust for each child in which you provide detailed instructions that specifically meet your hopes, concerns, dreams, values, and aspirations for that child and that specifically address your assessment of that child’s strengths and weaknesses.

Lifetime Gifts versus Gifts at Death

Tuesday, July 27th, 2010

Using your gift tax exclusion on gifts during your lifetime is much more tax-efficient than using your exclusion to reduce estate taxes at death.  When you make a gift, all future appreciation in the value of the gifted property accrues outside of your estate and is not subject to estate tax at your death (applicable in 2011).  For example, assume that you make a gift of $1 million to your children today.  If you live for another 20 years and that property appreciates at 7.2 percent, it doubles in value every 10 years.  At your death it would be worth $4 million.  The assets you gave away appreciated $3 million after you made the gift.  That $3 million will not be part of your estate for estate tax purposes and will have to pass to your children without the imposition of either estate or gift tax. 

On the other hand, had you not made the gift, then the $4 million of property remains in your estate and is subject to estate tax (applicable, again in 2011 ~ five months from now).  If you are in the top estate tax bracket when you die, your estate could incur close to $2 million in estate taxes.

Something I’m Passionate About …. A Trust Protector!

Thursday, July 22nd, 2010

What is a Trust Protector, you ask?  A trust protector is a person or corporation that, depending on the terms of the trust, has authority to oversee the trustees, to change provisions of the trust, to veto acts of the trustees, and, in general, to ensure that the trust is being properly administered.

You may want to provide a way to correct ambiguities or errors in the trust that could result in the trust failing to carry out your intentions.  You may want someone to have the discretion to respond to changes in the law to ensure that your trust carries out your intent and secures the best tax treatment consistent with that intent.

You can view the trust protector as Superman flying in to save the day, or at least a mild mannered mediator to intercede in disputes.  The role of the trust protector can be to resolve or even avoid disputes without having to resort to protracted court battles.