Estate Planning Tools Steve Jobs May Have Used

While it is likely that Steve Jobs’ estate will not pay estate taxes, it is not known exactly what estate planning tools Jobs’ utilized to reach this result. Five estate planning tools Jobs may have utilized are below:

1. As long as a spouse is a U.S. citizen, assets she inherits from her spouse are not taxed. A spouse can take advantage of this estate planning tool by leaving everything to his spouse directly or by having the assets go into a martial trust.
2. A taxpayer who makes a charitable donation in cash to a public charity can reduce his adjusted gross income up to 50%. Donations of appreciated assets can result in an income tax deduction of up to 30%.
3. The current exclusion amount allows taxpayers to transfer up to $5 million tax-free. Portability allows the surviving spouse to utilize any of the deceased spouse’s unused exclusion amount, meaning the surviving spouse could transfer up to $10 million tax free.
4. A bypass trust shelters future appreciation of the trust assets from estate taxes. Essentially, the trust preserves the deceased spouse’s estate tax exemption by putting in trust an amount up to the exemption. The trust is for the benefit of the children, but the surviving spouse can access the earnings. The trust then bypasses the surviving spouse’s estate upon her death.
5. A grantor retained annuity trust is a short-term irrevocable trust that holds appreciating assets. The grantor retains the right to receive an annual income during the trust term. If the grantor survives the trust term (a condition for this estate planning tool to work estate tax free), family members or other trusts can receive any appreciation above the Section 7520 rate.

See Deborah L. Jacobs, Steve Jobs’ Estate Not Likely to Owe Taxes, Forbes, Oct. 11, 2011.