Estate Planning

If you are a high wealth or high earning individual, meticulous tax planning is crucial. The new federal tax law doubles the amount of money that’s automatically exempt from the federal estate tax — to roughly $11 million of an estate for someone who was unmarried, or $22 million for those that were married. Of course, these exemptions are indexed over the next several years. The provision remains in effect through the end of 2025, unless Congress extends it. 

In our decades of experience working with high-earning individuals and  families, the most common trust tools used to avoid Estate Taxes are Credit Shelter Trusts and particularly the QTIP Trust or Marital Gift Trust – sometimes referred to as a bypass trust.

With acredit shelter trust (sometimes called a bypass trust), a donor’s last will and testament bequeaths to the trust an amount up to the value of the estate tax exemption. The remainder of the estate is then passed directly to the spouse tax-free using the unlimited marital estate tax deduction.

QTIP trust is a trust created upon the death of a spouse. The assets that are placed in the trust are used for the benefit of the surviving spouse until that spouse passes away. At that point, the ultimate beneficiaries, as established by the original donor, receive the remainder of the trust. 

QTIP trusts are designed primarily for individuals with multiple marriages who have children from these previous marriages. Under a QTIP trust, the donor is able to take care of their current spouse’s financial needs for the remainder of their life, while at the same time ensuring that their children’s inheritance is secure.

Under a marital gift trust with powers of appointment, the estate is split into two shares.

• The A share is placed in a trust fund. 
• The B share is gifted directly to the surviving spouse. 

Again, at this point there is no estate tax assessed against either share. The surviving spouse receives income and, depending upon the terms of the trust documents, also has access to the trust fund’s principal.

Each of these options has its benefits and drawbacks, and—as you can see—attempting to navigate estate planning without expert legal counsel can quickly become complicated, especially for high-earning families with valuable assets, several properties, and several marriages. Don’t leave the fate of your estate to chance. Hire an experienced estate planning lawyer and protect yourself against the pitfalls of navigating the process alone.

Estate Planning You Can Trust

Whether it’s a straightforward trust for an individual or family that owns a single home, or a complex, high-net worth, estate plan involving multi-faceted structuring, lifetime gifting, valuations, and irrevocable trust strategies, Brackin Law Firm will provide you with the estate planning and trust solutions you need to protect your family legacy.

Call or e-mail us today to assist with all of your estate planning needs.