Estate Tax Planning Opportunities During the Downturn

The combination of lowered asset values, reduced interest rates, and the prospect of estate and gift tax reform presents a unique opportunity to implement estate planning techniques that will yield significant tax savings for you down the road.

Many predict that Congress will pass an estate tax reform package that, while benefitting some, will place an onerous burden on others.

Now is the time to capitalize on the tax planning techniques that are still available to you and that have special potency under current economic conditions, including:

Family Limited Partnerships.  New legislation has already been introduced in Congress to eliminate the discounts available for gifts of partnership assets.  We can help you ensure that your gift will be “grandfathered” under existing law.

GRATs.  GRATs are trusts used to make future gifts of appreciating property to children and grandchildren on a virtually tax-free basis. We can help you discern if you have an asset that will appreciate at a rate faster than the current “applicable federal rate” or AFR, which would allow you to transfer any excess appreciation to children and grandchildren tax-free.

Charitable Lead Trusts.  A CLT pays an annuity to charities that you choose and then, after a period of years, the principal is paid out to your children or grandchildren.  We can help you decide which assets to invest to minimize any gift or estate tax.

QPRTs.  Low real estate values and interest rates make this an excellent time to consider a qualified personal residence trust.  A QPRT is a trust to which you (and your spouse, if married) transfer your primary residence or vacation home for a set term that is less than your life expectancy. Many of our clients have used QRPTs to significantly reduce the size of their estates for tax purposes, while maintaining the property within the family.

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