What Advanced Estate Planning Techniques Can I Explore?

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What Advanced Estate Planning Techniques Can I Explore?

Beyond simply passing your wealth along to your family, advanced estate planning can protect your family’s financial well-being and keep your financial fate in your hands.

There are so many ways to go about it: LLCs, irrevocable trusts, charitable remainder trusts, and a handful of tricks. “Each move calls for utmost consideration due to changes in markets and laws, and what was effective last year may not be so this year,” says Ana M. Veliz of Law Offices of Ana M. Veliz.

This guide dives into what really matters in advanced estate planning, demonstrating how such tools can be applied in practice so you can learn what you need to keep your legacy alive.

Wealth Planning Structures

Typical estate planning with advanced strategies would involve placing assets into an LLC and then combining it with Life Insurance coverage set up within an Irrevocable Life Insurance Trust. This works well together because each aspect maintains and protects estate value and reduces taxes.

A Grantor Retained Annuity Trust is a worthy consideration. But there are others, like a Qualified Personal Residence Trust or a Charitable Remainder Trust. Each one does its part, with some reducing the taxable estate and others providing income benefits to family members.

Corporate Entity Planning

Another shrewd tactic is Corporate Entity Planning, which can help protect one’s family wealth. By creating a Limited Liability Company with an Irrevocable Gift Trust, you can reduce the value of their assets by one-third. This implies that with such planning, you lower estate taxes when transferring wealth to family members.

Even better, you stay in charge of the company while you can hand off non-voting shares to your heirs. So you keep control while everyone else benefits, too. Another advantage of such business structures is that your business will be protected against risks such as lawsuits and even divorces.

Charitable Remainder Trusts

A Charitable Remainder Trust, or CRT, is another effective way to make a charitable gift while keeping income for yourself. Here is how it works. You transfer something of value, such as securities or property, into this trust. The trust sells it to your favorite charity, and since charities do not pay taxes, you avoid the capital gains tax.

With professional guidance, you can structure it so that you receive income from the trust. This income can last for your lifetime or for a specified term of years. After you are gone, what is left over goes to charity. Many individuals find it effective to purchase a life insurance policy and apply it to an Irrevocable Life Insurance Trust. This allows their family to receive an inheritance, while making their gift really count.

Transferring Business Interests

Estate taxes can be damaging to business owners when it is time to transfer wealth. But this can be avoided by starting to distribute parts of your business while you are alive. This can be achieved by dividing ownership, normally at a discount, through a Limited Liability Company.

Doing this reduces your taxable estate and shifts future growth out of your control. As your business grows, less of it gets caught up in that steep 40 percent estate tax.  Ultimately, this makes passing your business down to the next generation a whole lot easier.

Engaging Estate Planning Attorneys

When planning your estate, you want someone who knows the ins and outs of the law, and this is where estate planning lawyers come in. Estate planning attorneys are more than will drafters. They build plans tailored to your family, your wealth, and your objectives. 

A good attorney will help you understand the role of trusts, corporations, and insurance tools in your overall plan. They will monitor all changes in tax laws to ensure your plan remains effective throughout.

Find one with experience in advanced planning, not just estate planning. Meet with them in person, if possible, and ask whether they can provide examples of prior cases similar to your situation.