Tax Saving Strategies for Estate Planning
Estate taxes affect high asset estates. Taxes must be paid on the value of an estate that exceeds a government-set threshold, which varies from year to year.
The Illinois estate tax is also important to consider when establishing an estate plan. This is because the Illinois estate tax is imposed on estates in excess of a prescribed value. Careful planning is needed for individuals, especially married couples, in order to avoid any pitfalls in facing a potential Illinois estate tax liability.
Strategies to minimize or eliminate estate tax liability center on diminishing the value of the estate. If the value of the estate can be lowered below the estate tax threshold, then the estate can be transferred to its beneficiaries without being taxed. Trusts are the most commonly used tool to lower the value of an estate. Our attorneys are experienced in working with a variety of trusts and other tools to help clients lower their estate’s taxable value.
Our tax planning strategies include:
- Charitable Remainder Trusts - Assets placed in a trust for the eventual donation to a charity are not subject to estate taxation.
- Credit Shelter Trusts - Also known as a “bypass trust,” these trusts allow spouses to shelter assets from estate taxation and continue to use those assets and income from those assets during the spouse’s lifetime.
- Irrevocable Life Insurance Trusts - Life insurance policies placed in an irrevocable trust are not subject to estate taxation.
- Qualified Personal Residence Trust (QPRT) - A QPRT is a trust which is created to hold and ultimately distribute residential real property. There are several benefits to creating and funding a QPRT. Most of these benefits come in the form of tax savings related to estate and gift transfer taxes.
- Tax Saving Gifting Strategies - Involves transferring money to heirs prior to death in amounts less than would be subject to gift taxation.
To schedule a consultation with an experienced estate planning attorney skilled in tax planning strategies, contact Momkus McCluskey, LLC.