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Little-known tax secrets help with estate planning

Throughout your estate planning research, you may have heard about common strategies such as the use of revocable trusts or simple will documents. What you may not have considered, however, are the "Johnny-one-note estate planning" strategies that could make or break your Florida family's financial future. Do not limit your estate plan by only considering revocable trusts, especially if you are a business owner. Instead, remain open to these planning options that could help your beneficiaries avoid the tax man.

Business owners should know that selling their operation to heirs is unlikely to result in tax savings. Instead, consider using an intentionally defective trust to transfer ownership from parents to children. This is a tax-free alternative, allowing heirs to avoid both capital gains tax and income tax. On average, intentionally defective trusts save about $195,000 for every $1 million of the business' value. If you intend to transfer any of your business holdings to your children or other beneficiaries, you should consult your probate attorney about the details of establishing this specialized type of trust.

Another often-overlooked option for transferring assets is known as a FLIP. A FLIP, or family limited partnership, is a great starting point for probate needs, providing a strong tax shelter for most forms of property. FLIPs allow you to essentially lower the value of your assets, resulting in potentially massive estate tax savings.

Transferring wealth without estate tax burdens is, of course, an important goal for probate attorneys. Other strategies for accomplishing this goal include a variety of trusts such as charitable remainder trusts, irrevocable life insurance trusts and qualified personal residence trusts. You may have never heard of these legal processes, but your probate attorney can help you learn more while protecting your assets. If you are unsure about the usefulness of your existing estate plan, consult a financial adviser and qualified probate attorney to guarantee a low-tax asset transfer.

Source:  www.naplesnews.com, "Tax secrets: Winning the estate tax game" No author given, May. 13, 2013