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Advanced Estate Planning (Planning for the Generations)

WE HELP FAMILIES MAINTAIN CONTROL AND PROTECT THEIR ASSETS BY SUBSTANTIALLY REDUCING THE AMOUNT OF THEIR ASSETS THE GOVERNMENT WILL DEMAND IN WEALTH TRANSFER TAXES.

You've worked hard your whole life to provide for your family and make your loved ones more secure.  Without advanced estate planning strategies, much of the significant assets you have accumulated may end up with the IRS and state taxing authorities.  Without the correct advanced structures your simple estate plan may make your kids fight and may leave behind a legacy of conflict and broken family ties.

Our firm regularly assists affluent families with such sophisticated planning strategies as Family Limited Partnerships or Limited Liability Companies, Personal Residence Trusts, Irrevocable Life Insurance Trusts, Inter-Family Sales using Grantor trusts, business succession planning and a wide range of both private and charitable gifting techniques to reduce Federal Estate Taxes, Gift Taxes and Generation Skipping Transfer Taxes. 

Family Limited Partnerships 

A Family Limited Partnership (FLP) is a form of a limited partnership among members of a family. The main advantages of forming and funding an FLP involve estate and gift tax savings, asset protection and enhanced continuity of control.

Once the FLP is established and your assets are transferred to it, you can make gifts of limited partnership interests to your children or other beneficiaries. This accomplishes several different estate planning objectives simultaneously. 

First, the value of each limited partnership interest which you give away decreases the value of your taxable estate and, consequently, any tax which your heirs would have to pay upon your death. If the gifts are made using the annual gift tax exclusion, so you do not have to pay any gift tax on the transfer. 

Second, the value of the partnership interests transferred to your beneficiaries is far less than the corresponding value of the assets in the partnership. Since limited partners do not have the ability to direct or control the day-to-day operation of the partnership, a minority discount can be applied to reduce the value of the limited partnership interests which you are gifting. Furthermore, because the partnership is a closely-held entity and not publicly-traded, a discount can be applied based upon the lack of marketability of the limited partnership interest. This allows you to leverage the FLP as a vehicle to transfer more wealth to your beneficiaries, while retaining control of the underlying assets.  Lastly, a properly-structured FLP can have creditor protection characteristics since the general partners are not obligated to distribute earnings of the partnership.

Intra-Family Sales

Sometimes the best way to keep an asset in the family, is by selling it . . . from one family member to another.  For income producing assets an intrafamily sale can slash potential estate taxes, transfer all future growth in an asset to the next generation and allow the owner of the asset to continue to receive income.  Using a trust whose assets are considered to be separate from yours for transfer tax purposes, while still being considered yours for income tax purposes we are able to effectuate a non-gift for estate tax purposes (while transferring ownership) and a non-sale for income tax purposes (while receiving a steady stream of payments).Often combined with the use of a family limited partnership, this technique is highly effective at transferring assets for the lowest estate tax cost.

Qualified Personal Residence Trusts

Our homes are often our most valuable assets and hence one of the largest components of our taxable estate.  A Qualified Personal Residence Trust or a QPRT (pronounced “cue-pert”) allows you to give away your house or vacation home at a great discount, freeze its value for estate tax purposes, and still continue to live in it.  Here is how it works: You transfer the title to your house to the QPRT (usually for the benefit of your family members), reserving the right to live in the house for a specified number of years. If you live to the end of the specified period, the house (as well as any appreciation in its value since the transfer) passes to your children or other beneficiaries free of any additional estate or gift taxes.  After the end of the specified period, you may continue to live in the home but you must pay rent to your family or designated beneficiary in order to avoid inclusion of the residence in your estate.  This may be an added benefit as it serves to further reduce the value of your taxable estate, though the rent income does have income tax consequences for your family.  If you die before the end of the period, the full value of the house will be included in your estate for estate tax purposes, though in most cases you are no worse off than you would have been had you not established a QPRT.  An added benefit of the QPRT is that it may serve as an asset/creditor protection vehicle.  Potential financial predators are less able to attack your home since you no longer technically own the property after the trust is established and your residence is transferred to the QPRT.

Irrevocable Life Insurance Trusts

There is a common misconception that life insurance proceeds are not subject to Federal Estate Taxes.  If not removed from your estate and sheltered from estate taxes, life insurance payments are countable as part of your taxable estate.  Without additional protection, the proceeds are only safe from income tax – not wealth transfer (estate and gift) taxes. These taxes can deprive your loved ones of about half of the insurance’s value to estate taxes. 

An Irrevocable Life Insurance Trust is created specifically for the purpose of owning your life insurance policy. A properly established and administered trust holds the policy outside of your estate and keeps the proceeds from being taxable to your estate. The proceeds from the insurance policy can then be used to provide your estate with the liquidity to pay estate taxes, pay off debts, pay final expenses and provide income to a surviving spouse or children.  The ILIT will be the policy owner and beneficiary.  Once your trust is established, you use your annual gift tax exclusion to make cash gifts to your trust. Under the so called ‘crummey’ rules, your beneficiaries forgo the present gift (receiving instead the future proceeds) and the trustee uses the remaining gift to pay the premium on the life insurance policy.  For larger policies other techniques are used to make certain the proceeds are not subject to tax.

There are many options available when setting up an ILIT.   Very commonly the trusts are structured to protect treasured assets, like a family business or home from forced sale.  The ILITs can also be structured to take care of future family needs.  It can provide income to a surviving spouse with the remainder going to your children from a previous marriage. It can also provide for controlled distribution of limited amounts of the insurance proceeds over a period of time to a financially irresponsible child.

Our firm is dedicated to helping clients make educated, informed decisions about their assets and will work with you and your team of financial advisors and CPAs to implement a highly sophisticated estate plan.


The Attorneys of the Weissler Law Group assist clients in San Diego, California as well as in: Coronado, Pacific Beach, Del Mar, Solana Beach, La Jolla, Del Cerro, La Mesa, Lemon Grove, Santee, El Cajon, Rancho Bernardo, Poway, Escondido, National City, Spring Valley, and Chula Vista.



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