The Estate PLANNER
Here's a brief glance at what you'll find in the July/August issue... (a link to the PDF file of the full issue is below.)
IS YOUR ESTATE PLAN FLEXIBLE? ESTATE TAX LAW UNCERTAINTY REQUIRES OPTIONS
Absent congressional intervention, on Jan. 1, 2013, exemptions will greatly decrease and tax rates greatly increase. Many people are taking advantage of the current generous gift tax exemption by shifting as much wealth as possible to their heirs this year. But it's also important to build flexibility into an estate plan so that it can be quickly adapted to future changes in the law. This article discusses two options in particular: the qualified disclaimer and the credit shelter trust. A sidebar explains why, when using the latter tool, it's important to carefully draft formula clauses to ensure that they account for every possible contingency.
OWNING LIFE INSURANCE CAN MAKE ESTATE PLANNING COMPLICATED
A life insurance policy can be an important part of an estate plan. The policy can provide a source of wealth for one's family income-tax-free, and it can supply funds to pay estate taxes and other expenses. However, those who own their policy, rather than having, for example, an irrevocable life insurance trust (ILIT) own it, will have to take extra steps to keep the policy's proceeds out of their taxable estate. As this article explains, an irrevocable grantor trust can be one way of doing that.
NO TIME LIKE THE PRESENT: WITH FAVORABLE ESTATE TAX AND REAL ESTATE ENVIRONMENTS, USE A QPRT TO GIVE AWAY YOUR HOME
A qualified personal residence trust (QPRT) can be an effective tool for transferring a home to children or other family members at the lowest possible tax cost - while continuing to live in it. And given the current favorable estate tax environment and depressed real estate market, now may be the ideal time to establish one. This article explains the benefits of QPRTs and lists several factors that have created a favorable environment for them.
Estate Planning Red Flag
YOU AND YOUR SPOUSE HAVE A JOINT REVOCABLE TRUST
In both community and non-community-property states, joint trusts offer many of the same benefits as separate trusts - including probate avoidance, guardianship avoidance, privacy, and asset management in the event of a spouse's incapacity. But they don't provide the same level of creditor protection as separate trusts. As this article explains, those living in a community property state should weigh the asset protection benefits offered by separate trusts against a joint trust's tax benefits. And those living in a non-community-property state also need to consider the potential tax pitfalls of a joint trust.