| Estate Planning
> Reducing Gift and Estate Tax Liability How can
I reduce my gift and estate tax liability? You can reduce your gift and
estate tax liability through the formation and implementation of
an estate plan. Generally, an estate plan will include maximizing
both spouses' unified credit, which for 2002 and 2003 is $1,000,000
per person, and implementing plans to reduce the value of your estate.
This can be accomplished through lifetime gifting, the formation
of and transferring property to trusts, and the use of techniques
to freeze the value of appreciating assets. Life insurance is a valuable
tool that can be use to used to provide for the payment of estate
taxes upon your death. Life
insurance policies owned by either you or your spouse may be transferred
and held in an Irrevocable Life Insurance Trust ("ILIT")
with the proceeds going directly to your beneficiaries at your death.
If you transfer a life insurance policy to an ILIT by gift and you
survive for three years after such gift, the insurance proceeds
will not be included in your estate for estate tax purposes. Finally, both spouses should
maximize the annual exclusion for gifts, which for 2002 is $11,000
per donee. Such gifts do not have to be in cash, but could be an
$11,000 interest in property.
For assistance with
formulating and implementing an estate plan, Email
David.
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