Wondering what taxes will occur when your estate plan is administered is a common concern among Metro Detroit residents. Incorporating some advanced level planning into your estate plan can save you money for some taxable estate items.
Life Insurance Trust or Gifting Trust in Detroit
An irrevocable life insurance trust gives you more control over your insurance policies and the money that is paid from them. This type of trust can also reduce or eliminate estate taxes, so more of your estate can be handed down to your loved ones.
Wealth Replacement Trust
This type of trust is an excellent vehicle for passing large sums to your beneficiaries while avoiding Estate Taxes for several generations. Additionally, when funded by life insurance this trust may provide tax-free funds which can be used to create a “Family Bank.” Your loved ones can turn to the “Family Bank” for help when needed or to invest and build your family’s wealth for generations.
Planning Flexibility Tools
Our unique “flexibility” allows permanent changes to be made to the trust later, even though it is irrevocable. Plus, Wealth Replacement Trusts can provide significant asset protection for you and your beneficiaries from spouses, divorces, lawsuits, creditors and bankruptcies.
Personal Residence Trust
Enjoy your personal residence or vacation home during your lifetime and remove these assets from your taxable estate with a Qualified Personal Residence Trust (“QPRT”). The QPRT has the unique ability to save your beneficiaries hundreds of thousands of dollars (or more) in estate taxes, while allowing you the continued use of the property. This trust may also protect your primary residence and/or vacation home against potential lawsuits and creditors.
Capital Gains Bypass Trust in Metro Detroit
Avoid Capital Gains Tax upon the sale of appreciated property with the Capital Gains Bypass Trust, also known as a Charitable Remainder Trust. This type of trust is an IRS approved method. After transferring the assets to the Bypass Trust and selling them, you receive a lifetime income payment. When properly combined with a Life Insurance Trust, your beneficiaries will also receive the full value of the trust assets, estate and income tax-free. Alternatively, your beneficiaries may continue to receive income payments for a period of years after you’re gone.
Other Gift Planning
It is vital to seek legal counsel for gift planning in order to avoid IRS scrutiny of gifted property or disrupt your taxable estate at death. Careful consideration should be taken when planning gifts of real property to avoid tax reassessment. At Wall Law, our experienced Metro Detroit attorneys can help you avoid these and other potential pitfalls while counseling you on proper gifting procedures.
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Reduction or Elimination of Estate Taxes for Very Large Estates
After considering some of the above planning techniques, if applicable, more advanced level estate planning may be designed and implemented by our “of counsel” attorneys for estates that exceed $10 million. These include but are not limited to:
- specialized irrevocable trusts (such as “GRATs”, “IDGTs”, “CLATs”)
- private annuities
- self-cancelling installment notes
- and private foundations
Income Tax Reduction for Large Estates
Through our “of-counsel” attorneys, we also provide specialized income tax planning if you have over $250,000 of annual taxable income.
Wall Law is your Metro Detroit lawyer for life and can help you understand your planning options to preserve your wealth and family values for future generations. Have peace of mind, contact us today, and learn more about how we can help meet your advanced level planning needs in Oakland County, Wayne County, Macomb County, and surrounding Metro Detroit areas.