Proactive Estate Planning

The uncertainty surrounding estate and tax laws has caused some clients to believe that waiting to make estate plans is a safe bet, but waiting could be costly. A list of estate planning techniques advisors should discuss with their clients now are below:

Trusts: A client who creates a trust with minimal funding now may be able to ramp up the funding on short notice later on.

Family Limited Partnerships:Traditionally, clients have formed FLPs for gift and estate tax discounts. Even if the estate and gift tax planning benefits of these entities diminishes in the future, clients can still benefit from shifting income to later generations in lower income tax brackets.

Contributions: Clients may be better off making charitable contributions now because one proposal under consideration would limit the charitable deduction for individuals to amounts exceeding 2% of adjusted gross income.

State Residency: Clients who live in high-tax states may want to consider moving to a state with no or low state income tax as a proposal under consideration would restrict state income tax deductions.

See Martin Shenkman, Outcome Pending, Financial Planning, Nov. 1, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.