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T&E TALK: Irrevocable Trusts for the Young and Wealthy

Posted by Marco Svagna, CPA on Nov 16, 2015 7:00:00 AM

With no crystal ball, it is impossible to predict one’s wealth and net worth decades into the future. Yet for the young and affluent, those who have been born into wealth or have achieved great wealth at an early age, it is never too early to design an estate plan.

If you believe that your estate’s value will remain lower than the gift and estate tax exemption amount, it may make sense to hold on to your assets and transfer them at death so your children or other heirs can enjoy the income tax benefits of a stepped-up basis.

But what if your wealth grows beyond the exemption amount or Congress reduces the exemption amount? If that happens, removing assets from your estate as early as possible is the better tax strategy. Unfortunately, by the time circumstances have changed, it may be too late to adopt that strategy.

Use of an irrevocable trust is an estate planning tool that allows you to remove assets from your estate now, while giving the trustee the authority to force the assets back into your estate if that turns out to be the better strategy. You get to shield decades of appreciation from estate tax while retaining the option to include the assets in your estate should income tax savings become a priority.

No one can see into the future, but it’s never too early to look at your long-term options. Should you want to consider use of an irrevocable trust, contact us.

Marco Svagna, a tax partner at Berdon LLP, advises high net worth individuals and family/owner-managed business clients on estate and income tax issues, succession and financial planning, and other matters relating to the preservation of wealth.

Topics: T&E TALK

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