Advanced Estate Planning: Techniques and Know-How

Advanced Estate Planning: Techniques and Know-How

Samuel Ledwitz briefly speaks to us about advanced estate planning, touching on common techniques used and their advantages, especially for company owners looking for the best way to protect their assets.

What are common advanced estate planning techniques?

The creation of a wealth planning Limited Liability Company coupled with a Life Insurance policy placed into an Irrevocable Life Insurance Trust is common. Charitable Remainder Trusts, QPRTs & GRATs are standard advanced planning techniques as well.

Many times, clients will have Estate Planning goals that can be achieved through Corporate Entity Planning. Can you explain this in more detail and what this option entails?

I use a Limited Liability Company along with an Irrevocable Gift trust to: 1) Lower the value of the asset by approximately 30-35%; 2) Retain control over the asset while allowing for the gifting of non-voting shares to members of the family to further reduce the estate value and to shift income tax liability to the lower tax rates of the various family members, and; 3) to provide asset protection in the event of a lawsuit or down the road, if the family members get divorced, the asset will remain his or her separate asset and not be subject to being divided in divorce court.

Instead of leaving assets to charity in their Wills, many clients can benefit from setting up a charitable remainder trust during their lifetime. What are the advantages here?

A charitable remainder trust is powerful.  By using a highly appreciated asset, a client can give the charity the asset without any capital gains.  The client will receive a substantial tax deduction that can be used over six years and a life-long income stream of a fixed or a percentage amount of the asset. Life insurance in an ILIT (non-tax) can be purchased to replace the taxable asset that the charity is receiving.

It is often desirable for business owners to begin giving away interests in their business to their children during their lifetimes, to avoid large estate taxes that can cripple the business. How can this be achieved?

Over the course of a lifetime, a person can give away $11.58 million dollars. By giving discounted shares in the LLC, the business owner is transferring the wealth during their lifetime. The brilliance of this technique is that as the business increases in value, a large amount of the business has already been removed from the client’s estate. Thus, avoiding the dreaded high tax rate of estate tax (40%) on an appreciating asset.

How does Irrevocable Life Insurance Trusts help clients avoid Estate Tax liability? Why should ILITs be considered?

The life insurance placed in an ILIT will avoid estate tax as long as the client does not exert control over the ILIT and for existing policies, the transfer of the policy into the trust has to have been done more than three years before the death of the decedent. There are also some formalities, such as notices to the beneficiaries that are usually sent every year. If properly created and maintained, the Life Insurance will be income tax and estate tax free.



Samuel B. Ledwitz, J.D., LL.M. (Estate Planning)

California State Bar Certified Specialist

Estate Planning, Trust and Probate Law

Bezaire, Ledwitz & Associates, APC
21515 Hawthorne Blvd., Suite 585
Torrance, CA 90503
(310) 316-2400 (tel)
(310) 634-0313 (fax)

Samuel B. Ledwitz is an Estate Planning, Trust and Probate Law Specialist, certified by the California Board of Legal Specialization of the State Bar.

Samuel attended Pepperdine University School of Law, where he earned his law degree (J.D.) with an emphasis in the areas of estate and income tax. Next, Samuel attended The University of Miami School of Law, where he earned his Post-Doctorate Degree (LL.M.) in Estate Planning.

After earning his LL.M., Sam returned to Southern California to join one of the area’s largest estate planning firms, where he helped over 1,000 clients provide for their families through responsible wealth transfers from one generation to the next. Sam also relied on his significant tax law expertise to advise clients with high net worth on sophisticated tax strategies designed to maximize the assets received by their families.


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