Tax Planning

When planning your estate there are five primary tax schemes you need to be aware of:

  1. Estate Tax
  2. Gift Tax
  3. Income Tax
  4. General
  5. Generation Skipping Transfer Tax
  6. Property Tax

In addition there are a host of smaller taxes and fees involved in the transfer of property (recording, valuation, discount valuation, documentary transfer tax, escrow & title, etc.)

Not all planning techniques call every tax into questions but you should consider the affect of your plan on each of these tax areas.  You should also consider the current effect of any tax-efficient design on your current cash flow, control and lifestyle.  It is important to make your planning support your goals and not let the “tax tail” wag the dog.

That being said there are a wide variety of tax efficient designs that complement the goals of transferring assets to the next generation, establishing long-term visions, or making significant charitable gifts.

In your Foundational Planning your design will likely take advantage of two or three of the larger exemptions: the 100% marital credit; the estate tax credit; and the generation skipping transfer tax credit.  For a majority of people, those exemptions are the only tax planning they need to use in order to eliminate the federal estate tax.

Most people also have some form of IRA, qualified retirement plan, or annuity.  How those accounts are passed determines the taxation treatment on those accounts.  As part of both your Foundational and Advance planning, careful consideration should be given to the handling of your tax deferred accounts.

You might want to pass on your wealth to your grandchildren or establish gifts which travel down to your descendants through the generations without having it consumed by taxes.  Cornerstone can create and implement a plan to allow establish you legacy.


The attorney world has a host of acronyms for more advanced tax planning: CRUT, CRAT, CLAT, NIMCRUT, SCIN, IDGT, QPRT, ILIT and many others.  Most advanced planning techniques allow you to leverage your transfers by giving up some amount of control or benefit in exchange for a tax benefit.  Each of these techniques has advantages and disadvantages that need to be considered before using them.  At Cornerstone, we are experienced in walking our clients through the various techniques to accomplish their goals as tax-efficiently as possible – even if that goal is not paying any taxes upon their death.

Comments are closed.