Estate planning project - by Jon Andrews, CPA, P.C.
Mrs. Jones was a widow with three grown children. She owned cash, real
estate, and business interests as well as other assets that were valuable
enough that she had a taxable estate. In addition there was a $400,000
life insurance policy on her life payable to her estate. One of the
children actively participated in the management of the business and real
estate interests, the others did not.
Working closely with an attorney, we established an irrevocable trust to hold
the life insurance policy, a limited partnership to hold most of the business
and real estate interests, and a revocable (living) trust to hold her
partnership interest and other assets. Shortly after the formation, she began
giving small percentages of the limited partnership interests to her children.
At the time of her death, the revocable trust, by its terms, became
irrevocable and, therefore, held all of the assets that would otherwise have
been hers including cash, her home, personal property, and a 66% interest in the
family limited partnership. The life insurance policy was not includible in her
estate because of the irrevocable life insurance trust.
By using this structure, the estate tax was reduced from approximately
$600,000 (before any of the plan had been implemented) to approximately $75,000.
Just as importantly, the business and real estate interests remained intact and
in the family being managed in the same manner as they had been previously. The
estate was not faced with any liquidity or management issues and the ultimate
value to the family was preserved.
If this you or your family are facing similar issues, please click here
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The example projects discussed in this site are actual projects that have
been completed. The client names have been deleted to protect their privacy. We would be happy to discuss how these, or other ideas, apply
to your specific situation.
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