HIGH NET WORTH ESTATE PLANNING
What is a Trust Lawyer?
If you are anticipating creating a trust, you need to hire an experienced attorney who practices estate planning and who specializes in creating trusts
Our firm understands that our high net worth clients want to not only transfer wealth and minimize inheritance tax, but to create an enduring legacy that passes on values as well as assets.
Although the federal estate tax exemption is at a historical high of $11.7 million per person, the sunsetting of the Tax Cuts and Jobs Act (TCJA) on December 31, 2025 raises the prospect of exclusions decreasing to pre-2018 levels. Moreover, with the incoming administration, the estate tax exemption could be lowered before 2026.
Anyone with estates over the New York State estate tax exemption amount of $5.93 million will want to discuss with an estate planning attorney the various transfer techniques available to take advantage of the larger exclusion amount before the anticipated sunset of the TCJA.
Our firm regularly assists affluent families with planning strategies such as:
- Family Limited Partnerships
- Limited Liability Companies
- Qualified Personal Residence Trusts
- Irrevocable Life Insurance Trusts
- Spousal Limited Access Trusts (SLATs)
- Intentionally Defective Grantor Trusts
- And a wide range of charitable gifting techniques to reduce:
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How Do I Know If I Need a Wills and Trust Attorney?
There are a number of reasons you may need an attorney who specializes in trusts — here are a few:
- You want to protect your family from the time and expense of going through probate.
- You want to dictate when your beneficiaries receive their inheritance and under what circumstances.
- You wish to minimize estate or capital gains taxes.
What Types of Trusts Might a Trust and Estates Lawyer Recommend?
Family Limited Partnerships
As the name suggests, a Family Limited Partnership (FLP) is a type of limited partnership wherein members from the same family are involved. When an individual forms and directs their funds to an FLP, they not only enjoy tax savings on estate and gifts, but they also gain asset protection. Moreover, with an FLP, one can also retain control over the assets that have been transferred.
After the establishment of the FLP as well as the transfer of your assets, it is possible for you to make gifts of limited partnership interests for any of your beneficiaries.
Therefore, with this one step, you can establish various estate planning objectives at the same time.
- Firstly‚ your estate that is taxable decreases with every limited partnership interest that you give away and hence, your inheritors would also have to pay less tax after your passing. The annual gift tax exclusion is used to create the gifts, and thus, the transfer does not include your incurring gift tax.
- Secondly, in comparison to the assets’ value in the partnership, it is important to note that the value of the partnership interests that your beneficiaries are transferred to is quite low. You are also free to apply a minority discount in order to decrease the overall worth of the limited partnership interests that are being offered, as limited partners typically do not participate in taking control of the everyday partnership operations.
- Moreover, as the partnership in question is not a publicly-traded entity and is instead, one that is a closely-held entity, the parameter of the absence of limited partnership interest’s marketability can be used to apply a discount. Therefore, you are in a position to leverage the FLP and use it as a tool to transfer even more funds to all of your beneficiaries, as you continue to control the underlying assets.
- Finally, when an FLP is properly structured, it comes with aspects of creditor protection as the general partners do not have an obligation to take the money made out of the partnership and distribute it.
Qualified Personal Residence Trusts
Our homes are often our most valuable assets and hence one of the largest components of our taxable estate.
A Qualified Personal Residence Trust or a QPRT (pronounced “cue-pert“) allows you to:
- Give away your house or vacation home at a great discount.
- Freeze its value for estate tax purposes.
- And still continue to live in it.
Here is how it works:
- You transfer the title to your house to the QPRT (usually for the benefit of your family members), reserving the right to live in the house for a specified number of years.
- If you live to the end of the specified period, the house (as well as any appreciation in its value since the transfer) passes to your children or other beneficiaries free of any additional estate or gift taxes.
- After the end of the specified period, you may continue to live in the home but you must pay rent to your family or designated beneficiary in order to avoid inclusion of the residence in your estate. This may be an added benefit as it serves to further reduce the value of your taxable estate, though the rent income does have income tax consequences for your family. If you die before the end of the period, the full value of the house will be included in your estate for estate tax purposes, though in most cases you are no worse off than you would have been had you not established a QPRT.
An added benefit of the QPRT is that it also serves as an excellent asset/creditor protection vehicle since you no longer technically own the property once the trust is established and your residence is transferred to the QPRT.
Irrevocable Life Insurance Trusts
When it comes to proceeds from life insurance, a common misconception is that they will not be taxed under Federal Estate Taxes. Although your family will not have to pay income taxes on these proceeds, they are considered a part of your estate that is taxable, and hence your loved ones might end up losing anywhere close to 50 percent of that amount in the form of estate taxes.
The objective of creating an Irrevocable Life Insurance Trust is to ensure that you own your life insurance policy. When a trust is established and managed properly, the policy is considered to be an aspect that is distinct from your estate, and hence, your family will not have to pay taxes on the proceeds.
Therefore, it is possible to use your insurance policy proceeds to ensure that your estate is liquefiable enough to:
- Fund estate taxes
- Fund pending debts
- Fund last-minute costs
- Make sure that the spouse and children can sustain themselves.
The policy owner and beneficiary will be the ILIT. After the establishment of your trust, you can provide it gifts of cash by leveraging your annual gift tax exclusion. These gifts are not taken by your beneficiaries so they can enjoy future proceeds, and the rest is used by the trustee as the premium on the life insurance policy.
When establishing an ILIT, there are numerous options available. For example:
- It’s possible to structure ILITs so they can be a source of income for the surviving spouse, while the rest can be offered to any kids from a previous marriage.
- One also has the option of only providing a specific amount of the proceeds for a specific period, if a child is financially irresponsible.
Our team of trust lawyers here at Burner Law Group, P.C. make sure our clients make informed choices regarding their assets. We work in tandem with your financial advisors and CPAs, so you can be sure that the estate plan we devise allows you to transfer the optimal amount of assets to your beneficiaries.
Why Work With the Trust and Estate Lawyers of Burner Law Group?
Our firm understands that our clients want to not only transfer wealth and minimize inheritance tax, but to create an enduring legacy for their loved ones.
It is important to choose the right trust vehicles to achieve your objectives. Whether your wealth transfer involves family trusts, closely held businesses, income producing properties or securities - our trust and estates lawyers have been helping clients and their families navigate the legal landscape for twenty-five years. Our attorneys don’t just dabble in estate planning, we help shape it.
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At Burner Law Group, P.C. we pride ourselves on the quality, personal care and attention that we provide to each of our clients. Our entire staff is dedicated to serving our clients. With our commitment to knowing each client, we are confident that we will be able to address all of your needs and provide you with a solution that is right for you.
Mission of Burner Law Group, P.C Team
- To continually build a premier elder law firm that puts the needs of our clients first.
- To encourage each employee to be their personal best, both professionally and personally.
- To be recognized as leaders in our community and a valuable and trusted community resource.