Do Your Planning Now Top 10 reasons to move all necessary assets out of your clients’ taxable estates ASAP
Key Takeaways
by Tim Voorhees
• Clients can ”eat better“ by minimizing taxes, but they can also ”sleep better“ knowing that irrevocable trusts protect assets from lawsuits.
We learned on January 2, more than a day after the gift and estate exemptions returned to $1 million, that both of these exemptions are increasing to $5
• Popular estate planning tools such as IDITs, QPRTs, GRATs and LLCs may be limited by lawmakers in the future. Put these tools in place now to reduce taxes. They’ll likely be protected by grandfather provisions if Congress later changes the rules. •”Purpose statements“ and ”family meetings“ can be very helpful for preparing heirs and assets they’re slated to receive.
the strong desire of policy makers to keep the gift exemption tax low and to discourage wealthy people from moving money to taxpayers in lower tax brackets. In fact, if you did not encourage clients to move all necessary assets out of their taxable estates last year, you should consider doing so now. Top 10 reasons to consider moving assets For many reasons it made sense to move assets to irrevocable trusts last year even while the law was uncertain. And here are 10 reasons to consider doing so now: 1. Clients can grow assets outside taxable estates. Under the new tax law, clients can avoid a 40 percent estate tax by moving assets to irrevocable trusts. 2. Clients can lock in this year’s $5 million+ exemption. Because Congress normally grandfathers tax planning made under the current tax laws, gifts sheltered with the current exemption should be secure in case future tax increases lower the exemption again. 3. Planning tools can be secure even if Congress follows through on threats Congress has talked often about raising revenue by minimizing the use of common estate planning tools such as IDITs, QPRTs, GRATs, LLCs and others discussed in the book available at www.ZeroTaxCounsel.com. If you put these tools in place now to reduce taxes, they should be protected by grandfather provisions if Congress later changes the tools. 4. The irrevocable trust planning provides asset protection ben Clients can ”eat better“ by minimizing taxes, but they can also ”sleep better“ knowing that irrevocable trusts protect assets from lawsuits. 5. Irrevocable trust planning encourages wise life planning. Trusts need purpose statements. Crafting purpose statements for trusts often stimulates discussion about the purposes and mission of people who fund the trust and purpose often achieve much greater success. (For information about the power