Family Wealth Planning

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Estate and Transfer Tax Planning

January 01, 2009

Components of Trusts and Estates Law

Trusts and estates law provides the framework for planning for people and their assets during their lifetime and after death. The two temporal components are connected and subsumed under the heading of “estate planning,” or “trusts and estates.” The focus of pre-death and of post-death planning is different, however. (Included as Appendix A is a general outline of estate planning concepts and techniques covering all of these concepts.)

Pre-death estate planning involves planning for people and their assets to achieve personal and tax objectives. The benefits for a client, when these objectives have been achieved, are peace of mind and tax reduction. Peace of mind derives from having in place a plan that makes sense to the individual, putting tax considerations aside. Typically, this includes estate planning that provides for the contingency of incapacity; provides for the disposition of assets on death and perhaps during the donor’s lifetime; provides for distributions to charity; provides in a reasonable way for children and others through trusts for children or other management vehicles; and puts in place operational mechanisms to achieve all manner of personal and family objectives. Estate planning allows a person to “survive himself” in the sense that he or she has made provisions to be operative during life and after death.

In addition to obtaining the peace of mind that comes from having in place sensible planning for oneself and one’s family, a primary focus of estate planning is to minimize the transfer tax impact otherwise applicable to people with substantial assets. Transfer tax is a collective term for three taxes levied by the federal government, and additionally by some states: a tax on the transfer of assets during a person’s lifetime, called the gift tax; a tax on the transfer of assets at a person’s death, called the estate tax; and a tax on transfers to grandchildren or more remote descendants, called the generation-skipping transfer (GST) tax. There are threshold amounts before the tax applies. However, above the thresholds, a tax rate of 45 percent applies to the net value of the assets transferred. Planning to reduce or even avoid the impact of such a substantial tax is a primary focus of an estate planning attorney. (See Appendix B for a description of erosion of assets by taxes.)

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For more information, please contact:

Theodore Hellman

415-995-5019 Direct Phone
415-995-3439 Fax

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