Two Estate Tax Reduction Tools for California

4:16 am Uncategorized

Any California estate planning attorney can tell you that there are many, many ways to lower your estate taxes; some are very effective for certain people while for others they are not. Below are two popular methods for lowering estate taxes that might work well for your estate.

Creating a Private Annuity: This is a great way to avoid taxation on an estate, and if this applies to you, you’ll definitely want to ask your California asset management lawyer about it. A private annuity allows the grantor of an estate (through his or her trustee) to sell any asset held within the estate to a son, daughter, or other family member of the next generation. There is something called an “unsecured promise to pay” that applies to the member of the younger generation who purchases the asset (this basically means that there don’t really need to be payments, and unless otherwise stipulated, they can be in pretty much any amount).

Setting up an FLP (Family Limited Partnership): This is a tool in the estate planning tool belt that is often underutilized. An FLP allows for the grantor (or the trustee under the guidance of the grantor) to transfer the ownership of any family business. This business may be a mom and pop partnership or a larger s-corp. The FLP will transfer the business into the name(s) of the child(ren) and in this sense it will protect any assets within the estate from creditors and undue taxation.FLPs are very flexible and allow for the estate to be taxed at the tax rate of the children, which clearly (except in wild anomalies) is far lower.

These are just two tools you’ll want to bring up when you chat with your Newport Beach estate planner. We’ll keep discussing other ways to lower your estate tax—we invite you to peruse the remainder of the Web site.

Your California legal and financial planning experts are at your service; Contact us today.

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