We do more than look at our clients’ total assets and tell them they are under or over the State and Federal estate tax exemptions. There are many calculations that determine estate tax liability at the State and Federal levels. Certain beneficiaries or business assets can also add tax complexity. We include tax planning with our estate plans and will help coordinate with your tax preparer for the best tax treatment possible.
Tax Planning
In the estate planning and administration we handle, I utilize not one but three law degrees, two of which are focused on estates. This includes a Master of Laws (LL.M.) in Taxation from Boston University where my curriculum included:
- Estate Planning
- Estate Taxation
- Gratuitous Transfers
- Taxation of Fiduciaries and Trusts
- International Estate Planning
- Life Cycle of a Business
- Partnership Tax
- Corporate Tax
- Individual Income Tax
My Master of Laws (LL.M.) from Western New England University in Elder Law and Estate Planning included Estate Taxation, Taxation of Fiduciaries and Trust, as well as study of Medical Assistance eligibility and multiple estate planning strategies.
Gifting
Besides helping others and being personally rewarding, gifting can be a powerful tool to avoid both estate taxation and Medical Assistance recapture.
This is not as easy as writing a check or transferring a property deed. Calculating gift tax must be completed simultaneously with estate tax. Timing and written documentation is not only critical for avoiding taxes, but additional care must be taken to avoid Medical Assistance recapture.
Let us show you how proper gifting can promote your wishes to assist:
- other individuals with health care, education, or general needs
- educational institutions
- charitable groups
- religious interests
Marital Transfers
An underused tax advantage of marriage is unlimited tax-free transfers between spouses. Married couples have an unlimited ability to move assets between themselves for new estate tax calculations. Marital transfers can also be a power tool in obtaining Medical Assistance eligibility. With a thorough review of your assets and present needs, we can many times suggest simple strategies to benefit your family now, and in the future when dealing with taxing authorities or Medical Assistance agencies.
Irrevocable Trusts
Don’t be scared by the permanency of irrevocable trusts. Various irrevocable trusts are available to minimize or eliminate estate taxes. Care must be taken in drafting irrevocable trusts and moving certain assets to the trustee. If done properly, you can have the benefit of lowering your estate taxes while decreasing individual income tax and future capital gains taxes on your beneficiaries.
Recently the Minnesota Court of Appeals revived the ability to use irrevocable trusts for Medical Assistance planning purposes. Irrevocable trusts for Medical Assistance planning is presently an undeveloped strategy due to this precedent being so new. However, there are options to discuss based on your needs and level of risk tolerance.
Life Insurance
Life insurance is one of the most misunderstood assets in estate planning. This terrific benefit is tax free to beneficiaries, however, the death benefit will be added to your estate tax calculation. We are never surprised to hear that insurance and other financial professionals misstate these concepts to the purchasers of life insurance policies.
Forming a proper life insurance trust can totally avoid estate tax. Ideally this trust is implemented prior to purchasing a life insurance policy. However, you can still form a life insurance trust with an existing policy.
Calculating your estate tax liability with this in mind can greatly lower your future estate tax liability and increase what you pass on to your beneficiaries.
Tax Preparers
Coordinate with Tax Preparers
We engage in tax planning, which means I make calculations and provide suggestions for strategies on estate planning and administration. Our law practice does not allow for additional time and resources to complete tax returns and timely filings with the Internal Revenue Service and state Department of Revenue.
When it is time to complete tax returns, we use your written authorization to discuss and share our calculations and suggestions with your tax preparer. We actively work with your tax preparer to ensure our advice is properly carried through with taxing authorities to provide you with the most advantageous treatment.
