When your primary estate plan is in place, some clients engage in advanced estate planning to reduce taxes, freeze the value of a current asset and pass future gains to your children, or protect family and business interests, among other objectives. Advanced planning employs various estate planning methods, including asset freezes, transferring assets at below fair market rates so that you can transfer more of an asset within available gift tax exemption amounts, or passing highly appreciated assets to a nonprofit to avoid capital gains exposure. The most common advanced planning includes:
- Irrevocable Life Insurance Trusts (ILIT) to ensure insurance proceeds are outside of your taxable estate to save on estate taxes and ensure cash funds are available in the event an estate tax is due;
- Split interest trusts to freeze the value of an asset to keep future appreciation out of your taxable estate and push appreciation to your beneficiaries estate tax free, including Qualified Personal Residence Trusts (QPRT) and Grantor Retained Annuity Trusts (GRAT); and
- Charitable giving vehicles, such as Charitable Remainder Trusts (CRTs) and Charitable Lead Annuity Trusts (CLATs) to reduce your estate tax exposure, ensure and income stream for the remainder of your life, and make a donation to your favorite charities.
NEET will help you decide which approach makes the most sense for your situation and put a plan into place that will best accomplish your objectives.