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What is advanced estate planning?

What Is Important To Know About Advanced Estate Planning

Once a person in California has put their basic estate planning in place, they may want to consider the benefits of using more advanced estate planning. This type of planning is designed to help individuals successfully transfer their wealth to future generations. Asset protection is done in a way to minimize the payment of estate taxes or income taxes. The size and scope of an estate will determine if advanced estate planning will be necessary. It can be used to save a family business, farm as well as valuable pieces of property and more.

A common tool used for advanced estate planning is some type of a trust. This is a legal document designed to assist a person in transferring their assets before and after their death. There are four parts to a legal trust. The grantor sets up the trust. The trustee or successor trustee is responsible for following the requests of the trust document. There is also the property covered by the trust as well as the beneficiaries of the trust.

Qualified Personal Residence Trust (QPRT)

This makes it possible for a granter to transfer ownership of their residence into a trust for the benefit of a designated beneficiary. The grantor who sets up a QPRT trust will also maintain the right to continue using the residence. This results in a significant decrease in the amount of any gift taxes that may need to be paid.

Irrevocable Life Insurance Trust (ILIT)

There are situations where the proceeds from a life insurance policy could be subject to estate taxes. It’s possible for a grantor to avoid this by setting up an ILIT. In this situation, the beneficiary becomes a trustee. They will relinquish all ownership. This will result in the life insurance proceeds not being part of an estate.

Grantor Retained Annuity Trust (GRAT)

This type of trust works similar to a QPRT, but the assets covered are securities, cash, and other investments. A grantor can use a GRAT to cover a specific term. This trust makes it possible for a granter to give large gifts to designated beneficiaries and avoid paying large gift taxes.

Charitable Remainder Trust (CRT)

When this type of trust is established, a grantor has put specified assets into the trust. A specified distribution of at least one non-charitable income recipient must be made at least once a year. This distribution will last for a term specified in the trust. In most situations, the CRT is exempt from taxes. This is an excellent way for a grantor to eliminate low-yielding, high-appreciated property without paying any capital gains taxes.

Legal Professional

When a person is engaged in advanced estate planning, they should use the services of an experienced attorney. Since a major motivation for this type of planning is asset protection, an innocent mistake can be very expensive. It is important all the laws covering estates be carefully followed.

When someone believes they could benefit from advanced estate planning, Albertson & Davidson, LLP can help. These legal professionals are able to carefully review a person’s estate. They will listen to their client’s stated goals. The attorneys at Albertson & Davidson, LLP know what is necessary to help their clients achieve what is desired for their estate.