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.

Here at 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.