In this section: What to do if you have too much money. The new estate taxes. Intro to the three most common "advanced" techniques. John and Janet have been successful throughout their life. They have made smart decisions in business and work so that now their net worth exceeds 1.2 million dollars. They had done their homework and had in place an estate plan that kept the government from taking any of their estate so long as the estate did not exceed 1.2 million. (They used an AB trust.) Now, however, they have exceeded that level and need the next level of estate planning to help them eliminate estate taxes again. Advanced estate planning is a term I use to encompass an area of law directed at maximizing the financial and tax savings available to clients who have large estates. For the person who has over $600,000 worth of assets it is imperative that some further steps be taken in order to avoid paying estate taxes. Note that the amount a person can have and avoid taxes has been changed by recent legislation. (See the section on the new estate tax law for more information.) Where most clients may only need to institute a properly drafted living trust, when a client's estate reaches the upper limits where the unified credit is exceeded, additional "advanced" techniques must be employed to eliminate or reduce the depleting effect of estate taxes on the estate's value to the heirs. The three most common methods are the use of life insurance trusts, charitable remainder trusts, and family limited partnerships. The life insurance trust (ILIT) is perhaps the most common estate planning technique used to diminish the effect of estate taxes in taxable estates over the $600,000 (single) or 1.2 million dollar (married) value. By careful use of a trust combined with the leveraging ability of life insurance a client can remove a portion of his or her wealth outside the amount counted be the government at death. Generally speaking the charitable remainder trust (CRT) is most useful when the estate has a large component of the assets made up of appreciated property such as stocks with a low tax basis or real property that if sold now would garnish a large capital gain tax hit. The last of the advanced estate planning techniques is the family limited partnership (FLP). Through a concept known as valuation discounts the client can "give" estate value away while keeping control of the assets until death. The family limited partnership has the added benefit of insulating the assets from being subject to exposure to litigation. In other words the assets in the family limited partnership are exempt from attachment if some one sues you. The buttons to the left will help you navigate to the specific sections with more detailed explanations.

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