Trusts & Estates

Without sophisticated planning, an affluent family faces confiscation of 50 percent of its wealth when the surviving spouse dies and the federal estate tax is imposed. In some states the rate is higher because of state estate taxes. For certain forms of wealth, such as pre–tax 401(k) plans and IRAs, the effective rate of tax without planning can exceed 75 percent because of the "double hit" of income and estate taxes. As a result, less than half of a family's wealth may be left for children or other beneficiaries.

A well drafted will is essential. However, little can be done in a will alone to reduce the estate tax, except to postpone it for a surviving spouse's life and ensure effective use of the basic exemption. More than this is needed for a client of significant wealth, and that requires taking steps during his or her lifetime. The firm provides counsel to reduce the effective rate of estate tax through lifetime planning. We help our clients transfer an increased portion of their assets to beneficiaries on an after–tax basis and develop the appropriate legal structures, such as trusts and partnerships, to hold and manage that wealth over time.

Gift and estate tax rules now change frequently, as do the strategies for reducing the tax. Today's most important planning tools (such as family split–dollar insurance trusts, Delaware perpetual trusts, grantor trust sales and deliberately defective retained–income gifts) were almost unknown a decade ago. Further, recent significant tax law changes and the repeal of the federal estate tax have created material uncertainty concerning the future of the tax system. To respond effectively, a client must now consider the use of creative new will provisions. An important part of the firm's practice is to identify which of these tools and responses is appropriate for a given client and to aid in implementing them.

The firm counsels business owners on estate planning because strategies are crucial for transition events in the life of a business owner, such as initial public offerings, sales and reorganizations. This portion of the firms practice compliments our business and corporate practice involving succession planning, which looks to the eventual passage of the business on the owner's death or retirement.

We help executors to oversee the administration of estates and help them with the legal, tax and accounting work. We are also prepared to assist in carrying out various executional functions, such as collecting, valuing and disposing of assets and maintaining all estate records. We are assisted by experienced fiduciary accountants and administrators.

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