Saving
Estate Taxes for the Benefit of Grandchildren
The
"summer" article is a little late this year. I attribute
this to extended family gatherings. We don't all stay
in the same neighborhood any more. Years ago we drove.
Now we fly.
My nephew decided it would be a nice idea to have his
wedding in Tahoe on the fourth of July. My son, who
arranged to meet us in Reno for a shared car rental,
suggested that Mom and I take sufficient carry-on clothing
to cover us (literally and figuratively) for the wedding.
He predicted a challenging flight.
Our connecting flight was cancelled so we had to fly
to Sacramento to make the wedding in time. Our luggage
arrived in Sacramento but decided to fly on to Oregon
without us, and my son regretted his advice when he
and I showed up at the wedding in matching linen suits
( he suspected that everyone thought Mom had dressed
us).
I think often of the wit of an elderly passenger, who
after a particularly rough flight, said in a rather
loud voice to the Pilot on exit: "Sonny, did we land
or were we shot down?". But this article is not about
airline retaliation. It's about family. Specifically,
how to save estate taxes for our grandchildren.
I
find that in most estate planning for couples, our primary
goal is to protect the estate for the children. Naturally,
this includes the elimination or reduction of estate
taxes. More often than not the parents are willing to
jump through hoops to do this. Having said this, one
exception stands out.
When
I ask "are your folks living?" frequently the answer
is "yes". "Do you know how they intend to leave their
estates?" "No". "Would you be willing to find out?"
"We would rather not". "Do you realize that they could
leave your share in trust, giving you and your spouse
the income, as well as access to the assets for your
health, education and welfare?" "And that you could
make tax free gifts from the trust at any time to your
children?" "And all of this would be free of estate
taxes in your estate so long as the trust fell below
the Generation Skipping Tax Exemption, currently $1,010,000
for each grandparent?" "We are aware of some of this".
"Would it bother you to have your share in trust?".
"No."
"Now
would you be willing to find out about your parent's
estate plan?" "We would rather not".
Parents, your adult children are reluctant to ask you
about your estate plan. In many cases, while they are
planning to save estate taxes for your grandchildren,
you may be inadvertently incurring taxes in their estate
that could be avoided. In the grand scale of what we
will do for our family, I suspect sharing your estate
plan may be less painful than flying to family gatherings.
Link
of interest:
Generation
Skipping for Non-Tax Reasons
