Advanced Estate Planning Strategies
Pabian & Russell's estate planning group routinely employs advanced estate planning strategies including estate freezing tools and asset value discounting techniques to significantly reduce estate taxes for our clients.
A number of our attorneys are certified public accountants with masters degrees in business administration and tax law. Our combined legal, financial and accounting expertise allows us to identify and implement the most effective estate tax planning tools and strategies for your unique situation.
Popular Advanced Estate Planning Tools used by Attorneys at Pabian & Russell
- Irrevocable Life Insurance Trusts (ILITs)
- Family Limited Partnerships/Corporations (FLP/LLCs)
- Sales to Intentionally Defective Grantor Trusts (IDGTs)
- Grantor Retained Annuity Trusts (GRATs)
- Qualified Personal Residence Trusts (QPRTs)
An irrevocable life insurance trust is a trust that is set up as the owner and beneficiary of a life insurance policy. A client can make a cash gift to an ILIT to purchase a life insurance policy. When the client dies, the policy proceeds payable to the ILIT are excluded from the value of the estate for estate tax purposes.
A family limited partnership allows a family to pool its assets including investment accounts or a family business into a single family owned business partnership that family members own shares of. Interests in FLPs/LLCs can be part of lifetime gifting strategies and can allow individuals to pass interests in the entities to family members at a reduced valuation.
A gift or sale to an intentionally defective grantor trust (IDGT) is often implemented when there is an existing FLP or LLC in place or in conjunction with the implementation of a FLP or LLC. The transaction allows for a gift or sale of assets at a reduced value to an irrevocable trust for the benefit of family members or other beneficiaries.
A grantor retained annuity trust (GRAT) is an estate planning tool that allows a person to pass the future appreciation of an asset to the next generation with little or no gift tax consequences. The trust is set up as an annuity where the donor receives an annual payment for a fixed number of years. At the end of the term, the remaining value of the trust is passed on to the beneficiaries or a trust for the beneficiaries. Low interest rates make GRATs especially attractive because the required annuity payments are dependent upon the IRS's prescribed section 7520 interest rate. To the extent that transferred assets appreciate at a rate higher than the IRS's prescribed rate, excess appreciation passes tax free to the beneficiaries.
A qualified personal residence trust (QPRT) allows an individual to remove a personal residence from his or her estate. QPRTs allow the owner of the residence to remain in the home for a period of time with a retained interest in the property. Once that period expires the interest remaining in the property is transferred to the beneficiaries or a trust for the beneficiaries. Because a fraction of the value of the property is retained by the owner, the gift value is lower than its fair market value.