Protecting your wealth for the benefit of your loved ones is an important part of the equation when you are planning your estate as a high net worth individual. The federal estate tax is a looming threat, and it can take a significant toll given its 40 percent maximum rate.
To determine your level of estate tax liability, you would first inventory your assets. Once you come up with a figure, you compare the value of your estate to the amount of the federal estate tax credit or exclusion. During the current calendar year, the amount of the federal estate tax exclusion is $5.43 million.
It is possible to use a trust to protect your family wealth. There are various different types of trusts that are used for wealth preservation purposes.
These would be irrevocable trusts. This type of trust cannot be revoked or rescinded. As a result, you are surrendering incidents of ownership in the eyes of the law, and the assets in the trust would not be part of your taxable estate.
A type of trust that can be used for tax efficiency purposes would be a generation-skipping trust. With this type of trust, you name your grandchildren as the beneficiaries instead of your children. Your children could use assets in the trust, but they would never directly own the resources.
As a result, you would be skipping a round of taxation.
This is one example, but there are other irrevocable trusts that can be used to preserve wealth. Grantor retained annuity trusts, charitable lead trusts, charitable remainder trusts, and qualified personal residence trusts would be among them.
Free Report on Federal Estate Tax
You should go forward with a thorough understanding of the federal estate tax when you are planning your estate as a person of means. If you would like to learn more about the death tax, we have a valuable resource that you can access right here on our website.
Our firm has prepared an in-depth report on the estate tax and the estate tax efficiency strategies that can be implemented as a response. To get your copy of the free report, click this link and follow the simple instructions: Estate Tax Report.
Our firm can help you preserve your financial legacy for the benefit of those that you will be leaving behind. The optimal tax efficiency strategy will vary depending on the circumstances, and we would be glad to evaluate your situation, become apprised of your objectives, and provide you with personalized recommendations. You can ultimately go forward with a solidly constructed wealth preservation plan in place.
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Attorney Caprice L. Collins is a top rated Harvard Law School graduate. She has 34 years of legal experience with a successful law practice devoted exclusively to Estate/Business Planning and Trust Administration. Attorney Collins is a well-respected keynote speaker on Wills, Living Trusts, Estate Planning, Business Planning and Trust Administration. She has appeared on California’s Real Estate Radio Station KTLK AM 1150 as a legal expert on Estate Planning and Living Trusts among many other notable media appearances.