10th Oct 2013

An estate planning lawyer in Orange County states that for many people, the main objective of an estate plan is to ensure that their assets will be transferred to the people they care for after they die.  A well-executed estate plan can help a person meet this objective.  However, if the estate owner isn’t careful with his estate planning, his or her heirs may just find that there is another beneficiary to the decedent’s will or trust.  This beneficiary is Uncle Sam and his share of the estate comes in the form of federal estate tax. (The state of California does not impose an estate tax.)  So, now we have the second objective of an estate plan:  to keep estate taxes to a minimum. Certainly you wouldn’t want to your heirs to have to share your estate with Uncle Sam more than they need to.

I would say that estate planning and planning to save on estate taxes should go together.  When I meet with people who are considering an estate plan for the first time, I also offer assistance on estate taxes.  I do this by simply asking my client for an estimate valuation of their estate at current market price. The U.S. government sets a ceiling of exemption limit for estate taxes.  If your estate exceed this limit, then minimizes estate taxes is necessary.       

The basic strategy is for you to strive to lower the value of your estate and keep it as close to the exemption limits as possible.  As an Orange County estate planning lawyer, I have identified 3 tested options. These are: 
·       Giving cash gifts to people.  The maximum annual limit is $14,000 per giver per recipient.  Cash gifts in excess of $14,000 will be charged a gift tax.  Giving annual cash gifts results in lowering the value of your estate.
·       Use marital deduction.  Through this method, you create separate trusts on the death of the first spouse.  This means that the surviving spouse will have an estate valued at still below the applicable exclusion amount since the dead spouse estate has been transferred to a trust.
·       Get an Irrevocable Life Insurance Trust (ILIT).   This is a life insurance policy in which the policyholder cedes ownership of his policy to a trust.  As such, the proceeds of this policy will not go to the decedent’s estate (and increase the value of his estate).  Instead, the proceeds will go to his beneficiaries – free from any tax.     
The strategies mentioned above are just some of the options available to people who are
working to eliminate their estate tax.  There are other strategies available of course, especially for those whose estates have higher value. 

                  It all begins with the first consultation with your Orange County estate planning lawyer.  With several years of experience, I can categorically say that the first step to saving on estate taxes is to get a consultation. I strongly emphasize:  Do not procrastinate.  The sooner you meet with an estate planning attorney work out something, the better it is for you.  Contact Tompkins Law today.

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