That Instinctive Drive to Protect Our Children (Saving Otherwise Costly Estate Tax)

As a father of two children I tell my childless friends that I have an undeniable instinct to protect my daughters.  It is akin to a mother bear.  No words are necessary, nor required, to explain it.  On this point of protecting children, my wife and I recently were talking about estate tax planning (yes, dinner table talk sometimes in my home). This discussion arose because a friend of ours had recently criticized and objected to tax planning as merely another tool for the rich to get richer.

In the context of this rich-getting-richer comment, my wife (unabashedly a bleeding-heart New York liberal) commented that parents are understandably motivated in doing whatever is (legally) necessary to protect all their family’s assets on the notion, for example, if a child later were to have costly medical needs, etc.  And, how this can be a powerful factor in taking action within this instinctive drive for parents to protect their children.

In this context, eliminating otherwise potentially costly estate tax for your family’s needs rather than those dollars falling into the government coffers is an understandable goal regardless of whether one is conservative or liberal.

This blog post, therefore, is about an unprecedented and substantial opportunity to implement estate tax planning now (in 2012) that can for many families eliminate the threat of estate tax for both parents, regardless of increases thereafter in the size of their estates. This centers on the $5.12 million estate exemption available for each spouse until the end of 2012. It involves the use of family trusts with the parents as the primary beneficiaries during life, with the children and their descendants as beneficiaries thereafter.

The trusts must be created and funded this year and are designed so that no separate trust income tax return is required while the parents are still living (in tax jargon, “defective for income tax purposes”).  This planning opportunity ends at the close of 2012 (as a result of tax laws slated to apply beginning January 1, 2013).

I purposely do not include the technical details for this 2012 trust planning in this post. My point, instead, is to focus on the goal of protecting our children. Please contact me for more information.

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