Trusts Can Accomplish A Number Of Different Things

Thanks to the Tax Reform Act, many people are exempt from estate tax – for now. The federal exemption is currently $11,180,000, and the estate tax rate is 40% over that amount. Using estate tax, minimization techniques are more important than ever.

Do you believe you will be exempt from estate tax because you do not have enough assets to be taxed? When people add up the value of their estates, including often overlooked assets like retirement plans and life insurance policies, they are often surprised to learn that they fall into the taxable range, in Massachusetts, if not federally. Beneficiaries could be left with significant estate tax burdens.

At Lannik Law, LLC, we have more than 30 years of experience using trusts to minimize or eliminate estate taxes for people in Newton and the surrounding area. Some of the trusts we use include:

• AB and ABC trusts
• Irrevocable life insurance trusts
• Grantor-retained annuity trusts
• Qualified personal residence trusts
• Grantor defective trusts
• Charitable remainder trusts

In addition to trusts, we may use other entities such as family limited partnerships. Contact us today to schedule a free consultation about minimizing estate tax from a Newton attorney.

Understanding Portability

The Tax Reform Act has a portability feature that lets the exemption pass from a deceased spouse to a surviving spouse if the surviving spouse did not use it. While this feature can be beneficial in many situations, it should not be planned for, because it may not continue. If it does continue, it may work differently.

We create trusts that allow the estate tax exemption to pass from a deceased spouse to a surviving spouse regardless of what happens with the portability feature. These are primarily AB and ABC trusts. We have reviewed countless AB and ABC trusts, as well as other trusts, created by other lawyers.

We have seen the errors that can be made and errors that could lead to serious estate tax consequences. More importantly, we know how to avoid those errors when we revise estate plans or craft new trusts for our clients. As part of the Tax Payer Relief Act, the IRA Charitable Rollover is back. This allows you to roll over funds directly from your IRA account to a charitable entity without recognizing those funds as income for federal tax purposes. You may transfer a maximum of $100,000 from an IRA account in 2013 or a maximum of $200,000 per couple from each spouse’s respective IRA.

Let Us Take A Look At Your Situation

Every individual’s and household’s situation is different, particularly when there are significant and complex assets involved. We invite you to call 617-485-0193 or complete our online contact form to schedule a free consultation. We will review your situation and recommend an effective course of action to maximize protection for your assets now and for future generations.