Any Orange County estate planning attorney can tell you that there are many ways to lower your estate taxes; some are very effective for certain people while for others they are not. Below are two popular methods for lowering estate taxes that might work well for your estate.
Private Annuity: This is a great way to avoid taxation on an estate, and if this applies to you, you’ll definitely want to ask your Irvine estate planning lawyer about it. A private annuity allows the grantor of an estate (through his or her trustee) to sell any asset held within the estate to a son, daughter, or other family member of the next generation. There is something called an “unsecured promise to pay” that applies to the member of the younger generation who purchases the asset (this basically means that there don’t really need to be payments, and unless otherwise stipulated, they can be in pretty much any amount).
Family Limited Partnership (FLP): A family limited partnership (FLP) allows for the grantor (or the trustee under the guidance of the grantor) to transfer the ownership of any family business. This business may be a mom and pop partnership or a larger S-Corp. The FLP will transfer the business into the name(s) of the child(ren) and in this sense it will protect any assets within the estate from creditors and undue taxation. FLPs are very flexible and allow for the estate to be taxed at the tax rate of the children, which is almost always far lower.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.