Stewart Law, P.A.

I recently returned from an estate planning legal conference, bringing home five takeaways and techniques you should consider in your estate plan.

Family Wealth Over the Long Term

It is a good time to look at long-term (“dynasty”) trusts.  The $5 Million GST exemption means that you can pass a lot of money to future generations (beyond your children) without taxation.  On top of that, it now seems clear that North Carolina’s new statute allows for very long-term trusts.

Protecting Assets with the Help of Your Spouse

A trust that you establish for your spouse can be used to take advantage of the large exemption amount (i.e., $5 Million) that applies for 2011 and 2012 and can be used to protect the assets from creditors.

Because of a new North Carolina law, many such trusts will be given even stronger creditor protection if you are a beneficiary of the trust following the death of your spouse.  Thus, you might have indirect access to the trust assets you place in the trust during your lifetime (through your spouse) and direct access after your spouse’s death.  All of these assets could be considered protected from your creditors for claims that arise after you set up the trust.

Saving for College

In North Carolina, 529 income limits will not be imposed.  Therefore, a couple can still deduct up to $5,000 per year for contributions to NC 529 Plans.

Family Limited Partnerships and LLCs.

Family limited partnerships and Family LLCs continue to be used to great effect in estate plans.  So long as you are establishing one of these entities for the many non-tax benefits they offer, there is a good chance you will find there are tax advantages too.

New Estate Tax Law, New Opportunities and Challenges

Drafting for the new estate tax law (that is set to expire at the end of next year) means we need to consider some new concepts.

In addition to the much larger exemption amount ($5 Million), the new law allows the surviving spouse to take advantage of the unused exemption amount of the first spouse to die (this is referred to as “portability”).

Some situations where portability requires special consideration in an estate plan include (1) remarriage of the surviving spouse and (2) plans where amounts will (or may) pass to grandchildren or more remote descendants.  This latter circumstance presents an issue due to the fact that the amount transferred to the surviving spouse (using the portability feature) is not exempt from special taxes that apply in the case of property left to descendants in a generation below your children.