Written by P. Mark Accettura

The topics discussed in Chapter Nine apply to anyone considering an estate plan. The topics discussed in this Chapter Ten apply predominantly to individuals with a gross estate in excess of the Applicable Exclusion Amount (see “Planning to Avoid Estate Tax” in Chapter Nine).

Even with the changes brought by the Economic Growth and Tax Reconciliation Act of 2001, the techniques discussed in this chapter are still useful. The changes in the estate tax law have a sunset provision. They will expire on December 31, 2010, unless reenacted by Congress and signed by the President before that date.

Who knows what the politics will be in the future, especially if economic conditions worsen. There are also non-tax reasons for using these techniques such as transferring control of assets or family businesses to the next generation in an orderly manner, or tying up assets to prevent frivolous spending.

As noted in Chapter Nine, the face amount of life insurance is included in your estate. Irrevocable life insurance trusts are used to exclude the value of life insurance assets from the estate of the insured. If simply removing the life insurance from your estate will lower the value of your estate to be below the Applicable Exclusion Amount no further estate planning may be necessary.

If, after excluding life insurance, you still have a taxable estate, consider implementing a family limited liability company to make structured gifts to family members and loved ones. Finally, irrespective of the size of your estate, consider making charitable transfers to fulfill your social contract.