Strategies to Limit Taxes and Preserve Wealth
Raleigh, North Carolina, Estate Tax Planning Lawyers
The problem with estate taxes is that the rules keep changing. With the proper approach, however, you can plan for this uncertainty in the tax law and minimize or avoid taxes when your estate transfers to a spouse or children.
Armor Trust Attorneys provides insights and strategies to enable clients with significant assets to avoid mistakes that would trigger unnecessary taxes. Our Raleigh law firm counsels families and individuals in Wake, Durham, Orange, and Chatham Counties. We guide you to legally sound strategies for limiting estate taxes, finding the solution that best fits your unique circumstances.
The Estate Tax Exemption and Planning Alternatives
Assets that are included in estate tax calculations are: real property, IRAs, life insurance death benefits, stocks, bank accounts, and any other property you own at your death. This year an individual is able to exempt $3.5 million in assets from the federal "death tax." A married couple, if they take certain steps, can exempt $7 million. This means that either $3.5 or $7 million can pass tax-free to heirs, however, the IRS taxes any assets above that at a 45 percent tax rate. There will be no estate tax in 2010. In 2011, the estate tax is supposed to be reinstated with an exemption of $1 million and a top tax rate of 55 percent. Some speculate that Congress will act before 2010 to change the formula again, while others believe Congress will do nothing or repeal the estate tax all together.
If estate taxes are likely to apply when you or your spouse pass away, we can explore various instruments to shelter assets as much as possible. These trusts are known by many names (disclaimer trust, bypass trust, credit shelter trust) and work in different ways. We can explain the options for credit exemptions and help you choose the simplest route appropriate for you:
- An Irrevocable Life Insurance Trust (ILIT), if created properly, will remove death benefits paid to the trust from the estate of the insured.
- A Qualified Personal Residence Trust (QPRT) is used to transfer a personal residence that will appreciate in value to family members without incurring federal estate tax on the trust property.
- A Family Limited Partnership (FLP) can be formed to hold family businesses. It can protect assets such as a family farm, timberland, or family-owned business.
- A Qualified Terminable Interest Property Trust (QTIP Trust) allows a deceased individual to provide for a spouse from a second marriage and guarantee the assets are eventually left to the children of the first marriage.
- A Generation Skipping Trust (GST Trust) preserves the trust principal for the grantor's grandchildren, with his or her children receiving only income from the trust which avoids estate taxes at his or her children's death.
- An Intentionally Defective Grantor Trust (IDGT) removes appreciable liquid assets, such as stock, from an individual's taxable estate.
- A Dynasty Trust can protect the inheritance you leave your heirs from creditors, lawsuits, estranged spouses and future estate taxes through multiple generations.
The Solution That Serves Your Needs
Our estate tax planning lawyers have the knowledge to advise and the commitment to protect your interests. We take the time to review your financials, your goals, and your risks in order to identify the tax minimization strategy best suited for you.
Erica Ferranti focuses exclusively in estate planning, trust management, and wealth preservation. Contact our Raleigh office at (919) 571-4398 to arrange a consultation.
