There are special opportunities for specialized estate planning techniques in 2011 and 2012. The unified credit amount is the highest ever, interest rates (AFR) are extremely low, and asset values have been reduced. Now, is the time to consult with a qualified estate planning attorney to determine whether any of these specialized estate planning techniques are a good fit for you.
If you have wealth and would like to pass your assets to your children or grandchildren, this year and next are the perfect years to do so. Each individual’s unified credit amount is $5 million; this means that a couple can give away $10 million without incurring any gift tax.
In addition, your estate planning attorney can show you how to compress certain underlying assets, leverage your unified credit and generation skipping tax credit with life insurance, and provide asset protection for your gifts.
- Charitable Lead Trust
This low interest environment and reduction in asset values makes lifetime charitable lead trusts more beneficial than normal. A charitable lead trust provides an income tax deduction, stream of income for your favorite charity, and a lump sum for your family at the end of the charity’s term (i.e. at your death.)
- Loans to Family Members
Loans to family members are currently free or greatly reduced, depending on the size of the loan. The current low interest rates allow minute interest payments that can be forgiven either under the unified credit amount ($5 million) or the annual gift tax exclusion ($13,000.)
- Grantor Retained Annuity Trusts (GRATs)
GRATs are simply a method for transferring assets in wealthy families and they work well in a low interest environment. The government is currently trying to eliminate GRATs, so don’t delay consulting with a qualified estate planning attorney to determine whether GRATs are a good fit for you.
Take advantage of 2011 and 2012 and the unique estate planning opportunities these years provide. Consult with a qualified estate planning attorney.
Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.