Strategies To Reduce Your Estate Tax
Congratulations! Through hard work and a bit of luck, you have amassed a great amount of wealth and have built a large estate. Sadly, if you are fortunate enough to have an estate valued at over $5 million, you will likely have to pay estate taxes to the federal government upon your death.
At Kruchek Law, PLLC, we have a spectrum of estate planning and gifting strategies that can reduce or even eliminate the amount of estate tax owed to the government. Here are just a few of the tools we can use:
Irrevocable Life Insurance Trust
An irrevocable life insurance trust (ILIT) is specifically designed to hold and own life insurance policies. A gift of a life insurance policy into trust holds the policy outside of your estate and keeps the proceeds from being taxable to your estate upon your death. The proceeds from the insurance policy can then be dedicated to providing income and support to a surviving spouse or children, as well as providing your estate with the liquidity to pay off debts and other final expenses.
Charitable Remainder Trust
A charitable remainder trust (CRT) is an irrevocable gift placed into trust that will be given to a charity at the end of a certain term. During this term, your gift is invested and you receive a return on this investment, either from the interest on the gift or through an annuity. At the end of the term, the remaining trust assets are gifted to your charity. Moreover, not only is the financial gift not included in your estate for estate tax purposes, but you will also receive an income tax deduction on your charitable donation. It’s a win-win-win situation!
Qualified Personal Residence Trust
A qualified personal residence trust (QPRT) is designed to hold a residence and remove its value from your estate. By placing an irrevocable gift of a residence into a trust, the owner retains the right to use the residence for a specified number of years, and designates one or more beneficiaries to receive it afterward. This trust will also hold the assets necessary for the trustee to manage, rent, maintain and replace any residences as it becomes necessary.
Grantor Retained Trust
A grantor retained trust (GRT) is established by placing an irrevocable gift of an appreciating asset into trust. This asset will be held in the trust for a fixed number of years, during which you will receive a return based on the amount of your assets. After the term has ended, the asset will be given to a named beneficiary. The tax advantage of a GRT is that it removes appreciating property from your estate at a value that is reduced by the payment received.
Strategic Solutions For Your Estate Planning Goals
Estate planning attorney Beth Kruchek understands how important your legacy is, and will help you find the right measures to ensure it is protected for your family now and in the future.