How to Use Estate Planning to Ease the Tax Burden on Your Family

Nothing in life works as well when you have to do it at the last minute. Your term paper is never as good when you write it at 3 am the morning it is due, a fire sprinkler system isn’t very useful if you are trying to install it while your house is on fire, and changing the oil in your car is not as effective if your engine is already overheating. The same is true with planning for your family’s financial wellbeing.

At a time when you are still healthy and there is no urgency to dealing with your estate, that is when you want to think about how best to care for your family, financially, after you have passed.  

That means that now is the best time to do some estate planning, finding tax savings, and looking after your beneficiaries before it is too late. And estate planning is not something reserved for the very wealthy. A person at any income level would do well to engage in proper planning.

In this article, we are going to focus our discussion on some ways in which you can make sure that you plan your estate so you will have income in your retirement and remove a large tax burden for your heirs. In particular, we are going to talk about the   grantor retained unitrusts  .     

At Doane & Doane, PA, we are passionate about giving our clients the personalized legal counsel they need to appropriately take care of many major life and death decisions, whether it is estate planning or future child support.

So, to answer your estate planning questions, we welcome you to consider contacting us at Doane & Doane, PA for estate planning advice and services. You can contact us today at 561-656-0200 or fill out our online contact form . 

When it comes to planning how your assets are handled, you likely know that your beneficiaries will have to pay taxes on the money in your estate once you pass away.  

Wouldn’t it be great to be able to have your beneficiaries avoid having to pay all of those taxes once the estate is distributed to them? Well, it is actually very possible – with a little estate planning – to establish a way in which your heirs do not have to pay astronomical amounts of taxes when you pass.

You may think, however, the way to avoid taxes for your beneficiaries must mean that you have to lose access to the value of your estate during your lifetime. That is not so.

With a grantor retained unitrust , you are able to get the best of both worlds. You can set up a trust so that there is little to no tax burden when the money is distributed to your heirs at death. But, you can still enjoy the money in the trust during your lifetime . Sounds too good to be true, not necessarily.

A grantor retained unitrust is a form of an irrevocable trust . That means that you would create the trust by funding it with your assets (all or some portion), and then having little control over the trust money once it is formed. Your lack of control is what makes it irrevocable. 

Yet, the fact that it is irrevocable is why you able to pass along the assets to your heirs, without them shouldering any tax burden. As an irrevocable trust, the taxes on the assets are paid by the trust during your life. So, you have set up your heirs with a low tax burden on the money in the trust. 

The “grantor retained” portion of a grantor retained unitrust means that you, as the grantor of the trust, are able to retain some income from the trust. Thus, even though you set up an irrevocable trust that is controlled by a third party, you can make sure that the trust is set up in a way to pay you a sum of money (usually based on the interest your assets in the trust accumulate) annually during your life.  

Some people set up the trust to pay a fixed percentage of the amount of money in the trust. Others set up the trust to pay a fixed dollar amount of money from the trust every year (those are often called grantor retained annuity trusts).  

Regardless of the specific rules, the grantor retained unitrust is very handy in allowing you to still enjoy the fruits of your assets while protecting your heirs from having to pay exorbitant taxes when you pass away.

In short, consider contacting an experienced estate planning attorney to talk you through the options you have, including a grantor retained unitrust.   

Founded in 2003 by husband and wife legal team, Randell C. Doane and Rebecca G. Doane , Doane & Doane provides legal and financial services to families, individuals, and businesses throughout Southeast Florida.

Estate planning is about much more than just giving away property. It is an act of love and kindness, with the ultimate goal of providing for the future financial security of your loved one. At Doane & Doane, our Wills and Trusts Attorneys West Palm Beach help people plan for retirement, make provisions for loved ones, figure out future child support, and minimize tax liability. Experienced wills and trusts attorneys know which tools to use to get the best results for their clients. Our lawyers can help you determine which tools are best suited to your specific circumstances.

When it comes to probate matters, such as the formal administration of an estate, Florida fiduciaries seek the assistance of the attorneys at Doane & Doane, P.A. to administer and manage their trusts and estates. Notably, the founding partners of Doane & Doane are board-certified West Palm Beach Probate Attorneys . With the additional advantage of certified public accountancy in their backgrounds, they present a unique combination of skills and experience which enables them to effectively settle, administer, and manage clients’ trusts and estates.