Estate Tax Planning

With the increase of the unified credit to allow $2,000,000.00, the focus has shifted to structuring the assets for effective and efficient transfer to beneficiaries through the following legal instruments:

• Living Trusts
• Testamentary Trusts
• Transfer on Death, Power of Attorney Instruments

1. Living Trusts (set up during your lifetime)
   • Also called Revocable Trust or Inter-Vivos trusts
   • Avoid expense and time of probate court
   • Can provide step-up in basis at Date of Death if structured properly
   
   
2. Testamentary Trusts (come into existence at date of death)
   • Controlled distributions to children/heirs:

     outflows during time when child is a minor to the guardian; then Tiered Distributions (1/3 at age 25, ˝ age 30, 1/3 age 35) Otherwise on 19th birthday all money is paid to surviving child with No Supervision or Accountability

   • Affords payment for surviving child's education, or other specific purpose (example: purchase a home) through the provisions of the Testamentary Trust
   
   
3. Power of Attorney / Transfer on Death
   • This legal instrument allows another person (spouse, adult child, etc) to access bank accounts, investment accounts, or transfer real estate if incompetence or coma exists
   • The "Transfer on Death" designation allows for transfer immediately at Date of Death without going through probate court
   • The combination of this account designation and legal instrument can maximize pre-death transfer (gifting up to $13,000 per year without paying tax) and allow post death transfer without going through probate.