Newman Law Group

Protecting assets in view of current tax law

People concerned with passing on their assets and belongings after their death, and people who are concerned that the appropriate asset goes to the appropriate heir, tend to be very conscientious when it comes to estate planning in California. In addition to assuring the desired transfer of assets, a plan can also be key in protecting assets to be passed on. A successful strategy for this requires that plans be reviewed once a year or so.

There are many factors that can lead to a change or an update in estate plans. These include births of children, changes in jobs and also changes in tax law. There are two areas of an estate plan that can provide some protection for tax purposes. Two of these are family limited partnerships (FLPs) and limited liability companies (LLCs). Trusts can be set up in an order to avoid probate and maintain privacy around an estate but offer other advantages, many tax-related, as well.

If an LLC or FLP is part of one's plan, it should be reviewed to see if it is still serving its original purpose. Many of these were set up as a way to protect assets from the estate tax when the limit was only $1 million. It is currently $11.4 million. Trusts can be set up to hold assets for an heir, but they can be designed to remain in the control of the grantor. Depending on how a trust is set up, the grantor can have significant control over the assets and should monitor them periodically to maintain the value of the assets held in the trust.

Successful estate planning has many moving parts. Designing and maintaining one is not for the faint of heart. A person in California who is concerned with protecting assets for the next generation could benefit from a conversation with an experienced estate planning attorney. A lawyer can review one's situation and offer guidance regarding a new or existing plan and existing tax law.

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