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Profit from an Esta te Plan

A trust makes sure your wishes—and assets—pass on to loved ones and bene-
ficiaries as you wish.

Now let’s talk about a few ways to legally reduce, or perhaps even elimi-
nate, estate taxes.
A Revocable Living Trust is probably the most frequently used trust in
estate planning. In addition to avoiding probate, if you are married and estab-
lish a trust together, the trust can receive an estate tax exemption of $4 million,
through what’s called an “A-B” provision. If you don’t have a properly
executed trust, you’ll only receive $2 million—half of what your estate could
have received.

Charitable Remainder Trust

Another popular trust is the Charitable Remainder Trust (CRT ). This type of
trust serves three main purposes:

1. Benefits a charity of your choice.
2. Receives a current year tax deduction.
3. Provides an income stream for you and your spouse for life.

Often wealthy individuals realize that they and their children and grand-
children have enough money to live a lifetime of wealth, and set up a CRT to

benefit a charity and save on unnecessary taxes. In this type of trust, you
donate to the trust property (real estate, stocks, bonds, investments, cash, or
the sale of a business interest) for the benefit of the charity. During your life-

times, you and your spouse receive an income tax deduction equal to the fair
market value of the transferred property, and also income from the CRT.
After you both pass, the charity receives the remainder of the trust. This is a
great way to help a worthy cause, while helping yourself, too. It’s a true win-
win situation.

Spendthrift Trust

Another popular trust used for estate planning is the Spendthrift Trust . This
type of trust is established usually for the benefit of a minor child, fi scally

irresponsible adult child, or perhaps an elderly parent, who depends on you

for financial support or can’t manage his or her own fi nances.
Assets placed in such a trust never become the property of the benefi ciary,

who receives only income from the trust. Because a beneficiary never can
receive the assets in the trust, neither can creditors, which provides an asset
protection benefit for your estate as well.

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