VIEWS: 15 PAGES: 1 CATEGORY: Legal POSTED ON: 8/25/2011
There are a lot of people who think that the estate tax is fundamentally unfair for a number of different reasons.
Generation-Skipping Trust Can Provide Estate Tax Relief There are a lot of people who think that the estate tax is fundamentally unfair for a number of different reasons. For one thing, it is only imposed on some people and this type of selective taxation would seem discriminatory. For another, the rate of the estate tax is rather extreme. Right now it is coming in at a 35% top rate, and a federal levy that will consume more than a third of the taxable portion of your legacy is certainly questionable. But to make matters worse, if no changes to the laws are made in the meantime the maximum rate of the estate tax will go up to 55% in 2013. The final and perhaps the most compelling reason why the estate tax is considered to be less than just by many is the fact that it is an instance of double taxation. Say that you saved 20% of your pay every two weeks for 40 years. The money that you were able to put away would be a portion of what you were holding onto after you paid income tax. Why should the event of your death trigger a federal levy that consumes between 35% and 55% of the taxable portion of the financial resources you will be leaving behind? What's worse is that the estate tax can be imposed on the same funds more than once as they are passed on from generation to generation. One way to mitigate this asset erosion is through the creation of a generation-skipping trust. With these vehicles you name your grandchildren as the beneficiaries rather than your children, but your children can benefit from the trust. When your children pass away your grandchildren inherit the assets in the trust and they are subject to the generation-skipping transfer tax. But, in essence two generations utilized trust assets while they were taxed just once. Experienced estate planning attorneys Mobile AL of the Ryan Hicks Cumpton & Cumpton LLP offers estate planning and business planning resources to residents of Mobile AL. To learn more about these free resources, please visit http://www.epattorneys.com today.
"Generation-Skipping Trust Can Provide Estate Tax Relief"