Tax Reduction Trusts in Valencia
In the 1990s, most attorneys who practiced in the area of estate planning
had a Masters Degree in Taxation or they were Certified Public Accountants,
in addition to having earned a degree in law. The reason for this was
simple: The estate tax exemption in the mid-1990s was only $600,000, while
the estate and gift tax rate was 50%. In other words, if parents wanted
to leave more than $600,000 in assets to their children (for example),
they were looking at a huge tax. For instance, suppose parents had a net
worth of $900,000 as well as three children, who they wanted to receive
their estate, after they passed away. Everything else being equal, since
they had $300,000 in net worth above the $600,000 limit, half of that
excess (or $150,000) was owed in taxes after the death of the second parent.
In essence, each child had to write a check to Uncle Sam in the amount
of $50,000 within 9 months after the date of death of the last surviving parent.
Back then however, savvy families hired clever attorneys to figure out
how to use tax reduction trusts to minimize or even entirely get rid of
transfer taxes. In 2021, transfer taxes are a distant memory for most
since, for the moment, anyone can give away $11,700,000 in assets without
repercussion. That means married couples can leave over $23 million in
assets to loved ones without any transfer tax consequences. In other words,
over 99.9% of society in 2021 doesn't need to worry about "death"
taxes. But the political climate on this front appears to be changing,
which means that someday soon, some people will need to incorporate tax
planning into their estate planning, if they want to reduce transfer taxes.
Kaiden Elder Law Group, PC, we offer a broad array of tax planning trust techniques to help families
offset potentially devastating tax results. Although these tax issues
and potential solutions are too complex to explain on a website, we've
produced some very simple videos which help to introduce these topics
and some solutions. So for a brief introduction about trusts, taxes and
planning techniques, please take a little time to watch our simple videos below.