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Advanced NY Estate Planning Techniques

Asset protection techniques are used to protect assets from unexpected future creditors and lawsuit liability. There are various asset protection techniques that protect individuals’ assets during their lifetime and insure that their estate is intact when they pass on. They include forming trusts and family companies in New York and other states and countries.

Trusts are an effective way to shield your assets from future creditors, lawsuits, and other claims, laving more of your estate for your family to enjoy.

Forming a Family Company

A family company (partnership or LLC) can is used in many ways as an effective tax-savings tool. One way is to form a family company to hold a large asset, and make a gift of stock valued at less then $12,000 every year, tax-free. This is a way of gradually passing your property to your relatives without paying gift taxes or estate taxes.

For example, a couple that owns property worth $ 1.5 million and has three children can transfer $ 504,000 in seven years tax-free. If the parents do not want the children to own the stock right away, the stock can be put into a “crummey” trust for the children’s benefit.

Another way to use a Family Company to save on or avoid estate taxes and gradually giving up management of the business or assets to family members. That would involve forming a company managed and controlled by you and your future beneficiaries. This option is very flexible, but you will only realize tax benefits if this is done by an experienced professional. Also, it is important to tailor the amount of control of your assets that you are giving up.

Since you are giving up control of the company and the company is more difficult to sell, the IRS and New York State will accept a lower valuation of the company on estate tax returns and gift tax returns.

A/B Trust

We have discussed bypass trusts and QTIP trusts in the trusts section. An advanced technique would be directing a part of your estate into a bypass trust and another part of your estate into a QTIP trust. This will provide the benefit of not wasting a marital deduction, as well as controlling what happens to your estate after the spouse’s death.

Life Insurance Trust/Charitable Remainder Trust Combination

A Life Insurance Trust and Charitable Remainder Trust combination, if done correctly, allows you to place a part of your estate in charitable remainder trust, whereby the principal of the trust will go to the charity of your choice, while you will receive income during your lifetime. You will use the income to pay premiums for a life insurance policy owned by a Life Insurance Trust. Upon your death, the charity of your choice will get a substantial amount, while your estate might get even more.

GRAT Trusts

GRAT trusts, short for Grantor Retained Annuity Trusts, are advanced trusts used to avoid estate tax on part of the interests of assets. If utilized correctly and early on, they can save tremendous amounts on estate taxes. Click here for more on GRAT trusts.

Call the Law Offices of Albert Gurevich at (212) 233-1233 and make an appointment to discuss your estate planning needs.