Estate Tax Planning

CTBK has dedicated significant resources to assist our clients with their estate planning needs. Given enough time and proper planning, most estate taxes can be minimized or eliminated. Whether planning for an individual or for a business, CTBK's professional knowledge and experience makes us uniquely qualified to define areas where tax savings may be accomplished, while retaining our client's goals for disposition of his or her property.

Disposition Of Property
Our goal in estate planning is to be sure that your property passes to those persons whom you want to receive it. There are methods for structuring the disposition of property that may accomplish your goal, while also minimizing or deferring the payment of estate tax. The estate tax is not only imposed upon the property that you own at death, but also on any assets that will be passed on to others as a result of your death, including life insurance proceeds and retirement plan benefits. We can provide guidance on how to structure the beneficiary designations to minimize your estate tax and to maximize the deferral of any estate tax that must be paid.

Liquidity Analysis
A major estate planning concern that many individuals fail to consider is liquidity. It is not unusual for a family to have an accumulation of wealth tied up in real property, closely-held businesses, partnership interests, and other forms of investments that are not easily converted to cash. The Internal Revenue Service requires tax payment within nine months of a person's death. As a result, many people liquidate a business or sell property at depressed prices just to pay taxes.

CTBK can help analyze your estate and review the cash-flow needs following death. These will include the administrative expenses, tax payments, and cash needs of the family members. Once the cash-flow needs are determined, we will look at the sources for payment of those needs, and provide you with alternatives for meeting such needs.

Business Succession Planning
Many times the principal source of wealth is a closely-held business. Much of the planning for closely-held businesses centers around the determination of a business's value. Depending upon the organizational structure of the business and other factors, it may be possible to obtain a substantial discount in the value of the business for tax purposes. A reduced value will result in a lower tax base. CTBK will be happy to help you structure the disposition of your business interests to qualify for any valuation discount that may be appropriate.

The factors involved in the transfer of a business from one generation to another are numerous and complex. We can suggest several options for the transfer of wealth to the next generation, as well as various techniques for meeting your goals concerning retention of control or management. These techniques and suggestions will vary depending upon whether the business is planned to be transferred to family members, other business owners, or employees. Among the techniques that can be used are family limited partnerships, corporate recapitalizations, and an employee stock ownership plan. In addition, the ownership interest in the business may be a suitable asset for a lifetime giving program.

Use Of Trusts
There is a great deal of literature in circulation today concerning the use of trusts in estate planning, not all of which may be entirely accurate. CTBK can help you sort through the information that has been provided to you, as well as point out the advantages and disadvantages of using trusts. Certain legitimate trust arrangements can be useful for avoiding probate, if that is one of your goals. Often, a testamentary trust (a trust created in your will) is used to protect assets for your beneficiaries until they attain an age at which you believe they will be mature and responsible enough to handle the property. Other trusts may be suggested for the purpose of keeping certain assets out of your estate for tax purposes (such as a life insurance trust) or to be utilized as part of a lifetime gifting program (such as a children's educational trust). Trusts can occasionally be utilized for the shifting of income in order to reduce income taxes, although the opportunities in this area have been severely restricted over the years.

Charitable Giving
If you have charitable inclinations, CTBK can assist in the structure of a charitable gift that allows you or your family members to retain some benefits from property while also benefiting a charity. For example, a charitable remainder trust can be used to avoid immediate taxation on the disposition of appreciated property while providing the donor with a cash flow stream, an income tax deduction, and the knowledge that he or she has significantly benefited a favorite charity. There are a number of other methods that benefit both the donor and the charity that may also be appropriate.

For more information, please contact Charlie Chiampou or Cheryl Jankowski at 716-630-2400.