Estate Planning for Large Estates
The following table reflects the estate tax payable on the
death of the surviving spouse for a $10 million estate utilizing
a typical formula plan that funds a Family Trust with the
maximum available estate tax exemption and gives the remainder
to the surviving spouse.
 |
|
$10,000,000 ESTATE |
|
|
|
2001 |
|
$675,000 |
|
$9,325,000 |
|
$4,549,000 |
|
2002 |
$1,000,000 |
$9,000,000 |
$3,930,000 |
|
2004 |
$1,500,000 |
$8,500,000 |
$3,345,000 |
|
2006 |
$2,000,000 |
$8,000,000 |
$2,760,000 |
|
2009 |
$3,500,000 |
$6,500,000 |
$1,350,000 |
|
2010 |
$10,000,000 |
-0- |
-0- |
|
2011 |
$1,000,000 |
$9,000,000 |
$1,495,000 |
|
As the above table indicates, estate taxes can be shockingly
high for large estates. However, in addition to the above
means of reducing a taxable estate, the following are examples
of other more sophisticated means appropriate for larger estates:
-
Lifetime gifts of appreciatable assets up to the available
estate tax exemption in order to remove future appreciation
from the taxable estate.
-
Creation of Generation Skipping Trust for grandchildren
and more remote issue to take advantage of the $1 million
exemption from the generation skipping transfer tax and
avoid estate tax in your children’s generation.
-
Gifts of interests in a Family Limited Partnership to
transfer assets and future appreciation to children while
retaining control.
-
Creation of a Qualified Personal Residence Trust to
hold title to a primary and/or vacation residence and
remove the value of remainder interest from the taxable
estate while retaining lifetime use.
-
Creation of an irrevocable life insurance trust to pay
estate taxes with insurance proceeds that will not be
included in the taxable estate. (See flow chart on page
27 of Estate Planning Workbook)
-
Creation of a Charitable Remainder Trust or a Charitable
Lead Trust to fund either lifetime or testamentary charitable
bequests while obtaining present income and estate tax
benefits.
-
Creation of a Private Foundation to provide a charitable
legacy while obtaining present income and estate tax benefits.
|
