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Home » Guardianship » Estate Planning: The Right Tool For The Right Job

Estate Planning: The Right Tool For The Right Job

November 28, 2011 by Larry Parman, Attorney at Law

There are many different financial instruments utilized in the field of estate planning.  To understand your options and which are most appropriate for you is one of the reasons it is important to work closely with an experienced legacy planning attorney.  Estate planning is not a one-size-fits-all proposition so the optimal course of action will vary depending on the specifics of your estate.

The estate tax is a source of great concern for many people.  It can truly have a devastating financial impact on succeeding generations of your family. Many of the strategies that estate planning attorneys employ are implemented in an effort to gain estate tax efficiency. This often includes the utilization of certain specialized types of trusts.

One of these is the generation-skipping trust. Envision a scenario where you leave an inheritance to your children that is taxable. Assuming they are successful in their own right they will be leaving a sizable taxable inheritance to their children plus the value of the bequests that you left them. At this point the estate tax would be levied once again, meaning the same resources that were taxed once when you left them to your children would be subject to this federal levy yet another time when your children pass away.

With a generation-skipping trust you name your grandchildren as the beneficiaries, “skipping” your children. That’s actually a misnomer because it doesn’t mean you leave your children “out” of your estate plan.  Your children can be beneficiaries of the trust during their lifetime, receiving distributions and otherwise utilizing property that is held in the trust. Your grandchildren inherit the remainder of the trust assets after the passing of your children.  You have thus created a generation-skipping plan in that at their death your children would owe no estate tax on the value of the assets in this trust.  Taxes have been deferred for decades and two generations benefited from the resources while being exposed to just a single instance of taxation.

The generation-skipping trust is one of many tools in the estate planning toolkit. If you’re interested in some detailed information and guidance based on the unique nature of your own financial assets, simply take a moment to pick up the phone and arrange for a consultation with an experienced estate planning attorney.

Larry Parman
Author, President and Founding Attorney
Parman & Easterday

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Larry Parman, Attorney at Law
Larry Parman, Attorney at Law
Founder and Owner at Parman & Easterday
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.
Larry Parman, Attorney at Law
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Filed Under: Guardianship Tagged With: Gift Tax, pet trusts, Social Security

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