"Advanced Estate Planning" refers to the implementation of legal tools and techniques designed to reduce or eliminate Federal Estate Taxes. Some techniques are used primarily to further a business purpose or to provide asset protection from creditors, while simultaneously providing an estate tax benefit.
Advanced Estate Planning Tools & Techniques
Simply put, the estate tax is imposed on everything you own and/or control at the time of your death. When the estate value is over a certain threshold, estate tax may be assessed at rates as high as 55% under current law.
Because of this onerous tax rate, advanced planning focuses on reducing the size of ones estate at the moment of death. To accomplish this result, most Advanced Estate Planning strategies can be characterized as either an estate "freezing" technique or a "squeezing" technique. Freezing techniques focus on keeping the value of appreciating assets at their current level. Squeezing techniques focus on actually reducing the value of estate assets. Both techniques lower the future tax and both types of techniques will most likely be utilized as part of a well designed plan.
The good news is that there are literally hundreds of advanced estate planning tools available. The challenge comes in determining which of the many tools should be utilized in a given situation.
Many attorneys proclaim their firm's ability to create Family Limited Partnerships, Family LLCs, IDGTs, GRATs, QPRTs, CRTs and Family Foundations. While we utilize these tools, among many others, our ability to create and implement one or more of these strategies is far less important than how we go about the process of figuring out which ones are right for you!
We have provided some basic information on the most popular advanced planning techniques on the next page.
Advanced Estate Planning Process
For clients who require more advanced planning, our process is quite a bit different. Advanced Planning is usually for those who are facing a Federal Estate Tax, even after a Living Trust is implemented (and sometimes one or more Life Insurance Trusts).
In these cases, the nature and extent of the planning process is custom-tailored to suit the needs of the individual client. Typically, the process includes the following steps:
- Preliminary Analysis
- Design Blueprinting
- Review (and Modification) of the Blueprint