Estate Planning


It may be possible to protect the assets of your estate and minimize estate taxes by establishing one or more trusts. There are many types of trusts which are available.


A Revocable Living Trust is established during your lifetime. This type of trust provides instructions regarding whom you would like to manage your financial affairs and whom you want to receive your assets after you die.

A Revocable Living Trust offers you maximum flexibility and control while you are alive. In addition, your financial matters are handled efficiently and privately without probate court after you have died.

While you are alive, you pay personal income taxes on the income that is generated within the trust. Further, because the assets will not transfer until your death, the value of the assets is included in your estate for estate tax purposes.


The asset of the life insurance trust is an insurance policy on your life. When you die, the face amount of the policy is distributed to the trust beneficiaries. The beneficiaries can use the life insurance proceeds to pay the taxes on your estate and, thus, increase the estate distributions.

The Irrevocable Life Insurance Trust is set up during your lifetime. As the name implies, the trust is irrevocable. The proceeds from the life insurance policy are not part of your estate.


Married couples have the opportunity to establish Credit Shelter Trusts. The Credit Shelter Trust makes sense when the combined estate value of a couple is greater than the applicable exclusion. The applicable exclusion is $2 million in 2007 and 2008. Credit Shelter Trusts ensure both spouses an opportunity to use applicable estate exclusions. If a couple has an estate valued at $4 million, a properly prepared Credit Shelter Trust can eliminate all estate taxes.


A Charitable Remainder Trust is an irrevocable trust that lets you donate assets to a charity; however, you have the opportunity to enjoy income from the trust during your lifetime. The Charitable Remainder Trust is an excellent strategy if you have highly appreciated stock or other property. The stock or property can be transferred to the trust at fair market value without paying capital gains tax. Because the capital gains tax does not have to be paid, there is more money available to produce more income than if you sold the assets, paid the tax and then, reinvested the remainder.

During your lifetime, you will receive income from the trust. This income is taxable on your personal return. Since the trust assets will eventually be transferred to a charity, you have the opportunity to deduct the charitable contribution on your income tax return. The deduction on your tax return is equal to a percentage of the value of the property you have transferred to the trust.


The above trust information is general in nature. It is extremely important to engage a CPA and an Attorney when considering the establishment of a trust.