High-Asset Estate Planning

Estate planning for an individual or couple with a large estate is substantially more complicated than the average estate planning process. Part of this is simply because there are more assets to account for and distribute. But a major reason for the added complexity of high asset estate planning is the implications of the Federal Estate Tax. Currently, this tax is only imposed upon gross estates in excess of $5,000,000. This amount, however, could decrease substantially in the near future in the absence of Congressional action. Moreover, the estate tax rates could also increase in the near future.

There are several tools available for managing or minimizing the estate tax. For example, when a couple establishes a living trust as part of their estate plan, a credit shelter arrangement can allow them to take full advantage of their combined unified credits. If properly structured, this can essentially double the amount of the estate that is tax exempt. Moreover, the judicious use of life insurance policies coupled with an irrevocable life insurance trust can help provide income to your loved ones that is not subject to estate tax liability.

The simplest way for those with larger estates to minimize estate tax liability is to make full use of their annual gift tax exclusion. Because the gift and estate tax credits are unified, making large one-time gifts does not always reduce the total tax due. But with an annual gift tax exclusion that is currently $13,000 per donee, people with large estates can distribute substantial property to their families and loved ones during their lives while incurring no estate or gift tax liability on those distributions.

Information provided is of a general nature and does not act as a substitute for a personal discussion with an attorney. Your circumstances may create different legal opportunities.