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Grand Junction Estate Taxes Attorney

Guidance for Reducing Your Estate Tax

The federal estate tax is a tax imposed on the estate of a deceased person at the time of his or her death. Fortunately, the estate tax is not much of a threat for most families as there is an estate tax exemption of $5,250,000 and less than one-half of one percent of estates are expected to have an estate tax liability.

In recent years the estate tax has ranged from 38% to 55% for estates that are subject to the federal estate tax. However, for 2013 the federal estate tax rate will be 40% for estates over $5,250,000. Thus, for couples who have estates in excess of $10,500,000, the wise approach is to "plan for the worst and hope for the best" to protect your estate from this burdensome tax.

Making Gifts to Reduce the Estate Tax Burden

You can give up to $14,000 per year to any person (including friends as well as family members) and no gift tax is owed by either you or the person receiving the gift. In addition to annual tax free gifts, you can make gifts totaling $5,250,000 during your lifetime (the "lifetime exclusion") without paying gift taxes.

The Use of an Irrevocable Life Insurance Trust

Often referred to as an ILIT (Irrevocable Life Insurance Trust), this Trust is funded with a life insurance policy. Typically, the beneficiaries are the Grantor's children and grandchildren. ILITs are attractive estate planning tools, because the death benefit passes to the beneficiaries free from the federal estate tax and also free from the claims of any of the beneficiaries' creditors.

Family Limited Partnership

If you own a business, farm or ranch, by establishing a Family Limited Partnership , you can give your children and/or grandchildren a limited interest in your business using your annual gift tax exclusion of $14,000 per person. Even better, since the children and grandchildren are "minority" owners, the value of the gift is "discounted" by 20-40%, and thus you can gift up to $23,333 per person instead of $14,000 per person. The net effect is that any estate tax that otherwise would be owed, is reduced or eliminated.

Since 1993, The Law Offices of James A. Littlepage , a Grand Junction Estate Planning law firm, has been helping clients to reduce the impact of federal estate taxes with effective, straightforward tax planning. Mr. Littlepage has prepared over 2,000 estate plans and recently was recognized with a 2015 and 2016 Five Star Estate Planning Attorney℠ award. In 2014, 2013, 2012, 2011 and 2010 he received the Five Star Wealth Manager℠ award, as seen in 5280 and ColoradoBiz magazines. For assistance in avoiding the federal estate tax contact our Grand Junction office for a complimentary 30 minute consultation for estate planning and probate.