Asset Freezing Devices

There are many estate planning tools that can eliminate estate (death) taxes on the future appreciation of your assets.  The common denominator of these devices is that some or all of your asset (e.g., a business or real estate) is transferred by you to a trust, a business entity or your heirs.  Although you no longer legally own the asset, you still enjoy many of the benefits of ownership including control and income.  Since you no longer own the asset, it is not included in your estate when you pass for estate tax purposes:

§        Qualified Personal Residence Trust:  This tool allows you to give your home and/or vacation home to your heirs now in a manner that reduces or eliminates gift and estate taxes while allowing you to live in it for a period of years.  Since you no longer own the home, future appreciation will not be included in your estate when estate taxes are calculated;

§        Charitable Trusts:  These tools allow you to sell highly appreciated assets, avoid income and estate taxes, receive a deduction, earn income on 100% of the sale proceeds and give something to charity.  Since you no longer own the donated asset, neither its present value nor future appreciation will be subject to estate taxes at your death.  However, you may be entitled to receive income produced by the assets until your death;

§  Grantor Retained Income Trusts:  This tool allows you to give or sell assets (e.g., stocks, bonds, real estate) to your heirs in a manner that reduces or eliminates gift and estate taxes while allowing you to enjoy the income produced by them for a period of years.  Since you no longer own the asset, future appreciation will not be subject to estate taxes when you pass;

§        Family Limited Partnerships:  This tool allows you to transfer interests in a family business (including commercial real estate) during your lifetime to family members in a way that reduces or eliminates estate and gift taxes while allowing you to maintain control of the business.  Any partnership interests you transfer prior to death will not be owned by you and its value and any appreciation after the transfer will not be subject to estate taxes.