What Your Clients Can Do in 2012 to Permanently Save A Significant Amount of Estate,

Gift and Generation Skipping Tax
Moderated by: Leonard Weiner, JD, CPA, MBA, AEP

Clients have some great opportunities in the next seven months to permanently  eliminate most or all transfer tax (gift, estate and GST) without any unpleasant tradeoffs or sacrifices. There are options to  help the ultra wealthy and other alternatives to assist clients with a lower net worth. The exemption is only $1,000,000 next year and maximum tax rates increase to 55%. Clients do not have to be super wealthy to benefit from some of the options that are available in 2012. Many tax saving windows close at the end of this year.

A couple may save $4,532,000 of tax by permanently preserving their exemptions now.  Certain techniques may be implemented in 2012 to permanently lock in a client’s ability to save an additional much larger amount of taxes for many generations.  Some of these techniques, such as intra-family tax discounts and grantor and dynasty trusts may be legislated away for new trusts created or funded after 2012. 

Depending on which trust options they prefer, clients may (1) continue to indirectly but effectively retain control of trust property and (2) they may also be able to indirectly but effectively use and benefit from trust assets while still protecting them from future transfer taxes.  

Significant additional savings may occur over time because compound appreciation on trust assets is greater than it would be if clients owned those assets individually.  That occurs because trust assets are not reduced to pay taxes.

For example, with an 8% rate of return and no taxes, each $1,000,000 of assets put in this trust increases to more than $2,200,000 in ten years, more than $4,900,000 in 20 years, more than $10,900,000 in 30 years, and more than $24,200,000 in 40 years. 

Depending on which trust options your clients prefer, there is no limit to how much property may be transferred on a tax-free basis to a tax-free trust in 2012.  And all trust assets, including taxes saved, continue to appreciate in value faster (transfer tax-free) for many generations, creating even larger permanent savings.   

Current economic conditions enhance this planning.  Asset values and interest rates have been low but are beginning to rise.  Transfer taxes increase when asset values rise.  Another reason to act now is that lower interest rates and lower asset values improve this planning. 

Each opportunity may also include the world’s best and most client friendly life insurance trust. It is so simple, even a caveman can do it right. There is no gift tax cost or Crummey notice hassles.

If clients wait too long to act, they may be very disappointed later that they lost this great opportunity. 

Leonard Weiner

Leonard  Weiner  helps  clients  in most  areas of  law  relating  to  Estate Planning, Income  Tax Planning and Business. He received his Bachelor of Science from  the Wharton  School of Finance, his Juris Doctorate  from Georgetown  University  law Center, and his Masters of Business Administration from University of Maryland.  leonard is a certified in Estate Planning and Probate law, as well as Tax law  by the Texas Board of legal Specialization.   He is a Certified  Elder Law Attorney  through  the National Elder law  Foundation and is licensed to practice law in 39 states where ninety-four  percent of American's live.

Leonard  is listed as a 2011 Super Lawyer in Texas far  Tax Law.   He received the  President's Award  for Outstanding  Service from  the  Houston  Bar Association.    He was awarded  the  Louis S. Goldberg Memorial  Award for Outstanding  Achievement  from  the American Association of Attorney­ Certified Public Accountants.  Leonard received the Presidential Citation from  the Houston Chapter of the Texas Society of Certified Public Accountants for valuable contribution. He was recognized by Texas Monthly as an outstanding Estate Planner in their September 2010 issue.

Leonard is on the Board of Directors  for the Texas Society of CPAs.  He is a former  National President of  the American  Association  of  Attorney-Certified Public Accountants, Inc. and  a former president of the Houston Chapter of the Society of Financial Service Professionals.   Leonard is Chair (President) Elect of Synergy Summit, which is composed of two American Bar Association Sections, two American Institute of Certified Public Accountants Sections,American Association of Attorney- Certified Public Accountants, Inc., National  Association of Estate Planners & Councils, National Association of Elder Law Attorneys, Society of  Financial Service Professionals, and the Partnership  for Philanthropic Planning.