Deciding what will happen to your home, your financial assets, and your personal possessions after your passing can be a difficult process. However, if you don’t take the time to make these decisions now, a court may end up dividing your property for you.
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In almost all cases for 2010 estates that are less than $5 million (the applicable exclusion amount), the election to opt out should not be made.
Design multi-generational trusts
Design multi-generational trusts so that gifts to the trust are completed gifts to avoid inclusion in the grantor’s estate. Avoid estate tax in the beneficiaries’ estates by making sure that no beneficiary has a general power of appointment. Benefit multiple generations by using cascading trusts. Allocate sufficient GSTT exemption to always have an inclusion ratio of zero.
Estate taxes are payable currently
Capital gains taxes are only payable when the assets are sold. If they are not sold and the beneficiary dies with the assets in his estate, they would receive a full step-up in basis at his death (assuming current law).
In the past, even if you could find enough Crummey beneficiaries to cover the annual premium for a multi-generational ILIT for gift tax purposes, allocating GSTT exemption to cover all of the premium payments was often the sticking point.