Estate Planning For Large Estates ($5 million or more)

Estate Planning for Large Estates ($5 million and higher)

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

Year	Family Trust	Marital Gift	Estate Tax at Death of Surviving Spouse
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.