We approach detailed estate planning by reviewing more than our client’s current asset portfolio. Working in conjunction with a client's attorney and financial advisory team, we consider the goals and plans the client has for the disposition of assets during life and beyond, the effect these dispositions have on the gross estate and the various tax implications these dispositions will have upon their estate plan. 

Our clients are concerned with matters such as control over the family assets; the perpetuation of the family business; the family dynamic and the affect the disposition of assets will have on some family relationships. For the charitably inclined, there are concerns about how to incorporate contribution of funds and outright gifts to charities into their overall estate plan. In addition, we help clients plan for their retirement and consider the tax implications that this retirement planning will have on the lifestyle of the client into their golden years. Estate planning is therefore an all-inclusive term because we consider more than wealth transference upon death.  

Keeping abreast of the most recent changes in Estate Planning and communicating this information to our clients is one of our top priorities. Understanding the recent changes in the way state estate taxes are calculated is just one of the many current topics that can be of concern to your estate. New Jersey, along with many states, has de-coupled itself from the federal estate calculation, and our goal is to let you know how these issues may impact you and your family. Additionally, planning for the passing of assets to younger generations, be it children, grandchildren or more dynastic descendents, is another of the many potential pitfalls we can help you navigate past.  

The relationship we have with our clients does not end with the implementation of an estate plan. As our clients’ lives change, so do their estate plans. For example, our clients sometimes experience a financial upswing or downturn, or the family dynamic changes, or the tax laws changes, as they did recently. The latest tax law, starting in 2000, slowly repeals the estate tax over a course of 10 years, and then brings it back in 2011. These changes call for a revisit of the original estate plan, which is something that we do frequently with our clientele. Your AP&M representative can advise you on ways to reduce your estate tax risk in light of the changing landscape. Among some of the techniques that we utilize at our firm are ones that you may have heard or read about: 

By Pass Trusts
A trust that is established within a will, often referred to as a testamentary Credit Shelter trust. This technique shelters the unified credit amount as it goes to the next generation by protecting it in a trust during your spouse’s lifetime. The unified credit, the amount that can pass free of estate tax, is $1,000,000 for 2002 and 2003, $1,500,000 for 2004 and 2005, $2,000,000 for 2006 through 2008, and rising to $3,500,000 in 2009.

QTIP Trusts
This trust arrangement gives the decedent control over the disposition of assets even after death.  The surviving spouse receives income for life and the decedent selects, through their will, who gets the property after the surviving spouse dies. This trust allows for the flexibility often needed in planning for today’s changing blended families. 

Planned Gifting
A major concern for larger estates is reducing or avoiding tax on assets that are likely to greatly appreciate. Utilizing a lifetime gifting plan, appreciated assets or those most likely to appreciate can be transferred to others, during your lifetime. Under current tax laws, anyone can gift $12,000 ($24,000 for married couples who elect gift splitting) to another individual without any adverse tax consequences. This method achieves the benefit of reducing your estate by the current value of assets while escaping inclusion of their future appreciation. In addition, there are more sophisticated techniques to save on gift taxes, which use trust arrangements that take advantage of the present versus future values of gifts. 

Personal Residence Trusts
In this approach, you transfer your primary residence or vacation home to a qualified personal residence trust set up for a number of years, during which time you retain the right to use and fully enjoy your house as you currently do. By surviving the trust term, both the value of your retained right to use the residence during the trust term and all appreciation of the home after the set up of the trust, will escape taxation. 

Planned Charitable Giving
If you are inclined to donate monies to a charity, there are numerous planning opportunities utilizing trust arrangements that will not only provide estate tax savings, but will provide you with income tax savings as well, during your lifetime. 

Family Limited Partnership
By properly forming this entity with the other members of your family, you are in essence creating a vehicle to gift assets to a successive generation at a significant valuation discount. A valuation discount for lack of marketability and control may be appropriate for gifted units, resulting in a significant reduction in the taxable gift. Therefore, a gift valued greater than $12,000 prior to discounts can be made in any year, resulting in the client incurring either lowered or no gift tax at all. This arrangement has several advantages to the senior family members because it affords them creditor protection and management over the control of family assets. 

Many of the above techniques involve sophisticated income tax issues that require a detailed understanding of the interrelationship of estate taxes with income taxes. Our Estate Planning specialists combine their extensive knowledge in both these areas to achieve the optimal result for each client. 

The Estate Planning specialists at Amper, Politziner & Mattia can advise you on those techniques appropriate to your situation. Contact Jack Meola CPA, JD, LL.M., Director of our Estate Planning Division, 908.218.5002 for a comprehensive review of your individual circumstances to determine which estate plan works best for you.

Contact: Jack Meola