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Advanced Estate Planning Strategies

What is advanced estate planning?

Once the foundation has been set for basic estate planning, it may be worthwhile to consider more complex advanced estate planning techniques. These are designed to have a two-fold purpose: to help transfer wealth to future generations while also minimizing the possibility of estate and income taxes. Depending on the size and scope of your estate, your family risks losing important assets without a strategic plan in place; this could mean the forced sale of a family farm, business, or any other important piece of property.

Different Techniques for Advanced Estate Planning

  • Qualified Personal Residence Trusts (QPRT): With a QPRT, a grantor can transfer a residence into a trust for a beneficiary, while still maintaining the right to use it. This results in an exceptionally low gift tax, because the value of the gift is calculated by taking the full value of the residence placed into the truth and subtracting the value of the right of the grantor to use the residence. If the grantor lives longer than the trust term, the value of the residence, along with appreciation, are removed from the estate completely.

  • Grantor Retained Annuity Trust (GRAT): A GRAT is similar to a QPRT, except it is made in regards to cash, securities, and investments. With a GRAT, the grantor sets a specific term and is able to give large gifts to loved ones without having to pay large gift taxes. A GRAT is typically set up as an annuity, where the donor is sent regular payments for the length of the term; once the term is up, the rest of the value is given to the beneficiary as a gift.

  • Charitable Remainder Trust (CRT): When a CRT is established, the grantor places a certain amount of assets and/or cash into it; the grantor is then given a certain amount of income each year. This can either last for a certain term (up to 20 years), for the grantors' entire life, or even for the life of the grantor's spouse, children or grandchildren. When the trust ends, the remaining value in the CRT is passed along to a charity or qualified non-profit organization, with it being exempt from estate tax.

  • Irrevocable Life Insurance Trust (ILIT): Due to having incidents of ownership over the proceeds of a life insurance policy, they can be subjected to estate taxes. To avoid this, you can establish an ILIT, which names a beneficiary as a trustee, effectively giving up all incidents of ownership. Once this has been accomplished, the proceeds of the life insurance policy are no longer included in the estate. Upon passing away, the insurance proceeds will be placed into the ILIT and held there for the benefit of your spouse, children, or any other beneficiaries that have been named.

The above are only four of the different types of strategies that can be utilized for advanced estate planning. You could also use strategies such as a Family Limited Partnership (FLP), Dynasty Trust, Generation-Skipping Transfer Tax (GST) Trust, Defective Grantor Trust (DGT), or even a Self-Cancelling Installment Note (SCIN).

Do you need an estate planning lawyer in Pittsburgh, PA?

Due to the complexity of advanced estate planning, it is highly encouraged that you involve a qualified Pittsburgh estate planning attorney from Temple & Frayer Law. At our firm, we have vast experience in the most cutting edge advanced estate planning strategies; we know the best steps to take and can help our clients who wish to provide security and longevity for their heirs and loved ones.

If you have questions about advanced estate planning, or if you would like to discuss your case with a legal professional, do not hesitate to contact us at Temple & Frayer Law today.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.