Beat Estate Tax Forever: The Unprecedented $5 Million Opportunity in 2012

By Michael Gilfix

" I worked all my life to build what I have. I'll be damned if I'll let it all go out the window on my death."

B. T., a client of the Gilfix and La Poll office



"Protect $5 million or $10 million this year?! Amazing. And Gilfix explains how accessible it is."

Andy Cohen, CEO, Caring.com

" Thanks for showing us how to keep everything for our kids and, better yet, for our grandkids!"

G. C., a client of the Gilfix and La Poll office




A must read if your estate is over $1 million.

• Language: English
• Publisher: Xlibris US
• Release date: Apr 13, 2012
• ISBN: 9781469187341

Michael Gilfix

Michael Gilfix is a nationally known authority in the field of law, aging and estate planning. A 1973 graduate of Stanford Law School, he is a Fellow of the National Academy of Elder Law Attorneys (NAELA), a co-founder of NAELA, and a Certified Legal Specialist in Estate Planning, Trust and Probate Law. Mr. Gilfix regularly addresses professional audiences, including attorneys, physicians, certified public accountants, and financial planners, nationally as well as locally.An entrepreneur in the legal field, Mr. Gilfix created the first legal aid program for elders in 1973. He served as Executive Director of that program, Senior Adults Legal Assistance (SALA) of Santa Clara County, for ten years. In 1983 he created the law firm that is today known as Gilfix & La Poll Associates LLP.For over 30 years, Gilfix & La Poll Associates has innovated creative legal solutions to help you manage and plan the future of your estate. Together, we will decide which strategy will best serve your individual needs and those of your beneficiaries. Their future is in your hands and it’s a privilege for us to serve you in this regard.Mr. Gilfix has been a principal speaker for numerous trust and tax symposia at the national level, including the Center for Judicial Education, the American Institute of Certified Public Accountants (AICPA) the New York University Tax Institute, and the National Academy of Elder Law Attorneys (NAELA).Mr. Gilfix is a California legal advisor to Partnership For Caring, the national organization devoted to rights of individuals to make their own health care decisions.A highly respected practitioner and a prolific author, Mr. Gilfix is co-author of Tax, Estate & Financial Planning for the Elderly: Forms and Practice (Matthew Bender) and is the principal author of Medi-Cal and Asset Preservation, a book- length set of materials for practicing attorneys. He regularly contributes to a wide variety of legal journals such as Trusts and Estates Magazine, where his writings have discussed the role of personal values in estate planning, life care communities, and asset preservation planning.Mr. Gilfix holds an AV rating from Martindale-Hubbell, as judged by his peers in the legal profession. This rating, the highest given “... reflects an attorney who has reached the heights of professional excellence, ... has practiced law for many years, and is recognized for the highest levels of skill and integrity.”Mr. Gilfix is a member of the National Academy of Elder Law Attorneys’ Council of Advanced Practitioners. NAELA guidelines state that an attorney must be preeminent in the field of elder and special needs law to hold this title. Mr. Gilfix has a reputation as an experienced, outstanding, and exceptionally skilled elder and special needs law attorneys

Book preview

Beat Estate

Tax Forever

The Unprecedented $5 Million Opportunity in 2012

111820-GILF-layout.pdf

Michael Gilfix

Copyright © 2012 by Michael Gilfix.

Library of Congress Control Number: 2012905732

ISBN:                   Hardcover                   978-1-4691-8733-4

ISBN:                   Softcover                    978-1-4691-8732-7

ISBN:                   Ebook                         978-1-4691-8734-1

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

To order additional copies of this book, contact:

Xlibris Corporation

1-888-795-4274

www.Xlibris.com

[e-mail]

111820

Contents

Dedication

Acknowledgments

Disclaimer

Glossary of Legal Terms in this Book

Preface: Why This Book is Vitally Important for You and Your Family

Chapter 1: 2012 An Unprecedented Year of Opportunity

CHART A:

Estate and Gift Tax Protection

2012 and 2013 Comparison

Chapter 2: What Is In Your Estate?

A. What Is Included

B. Estimating Your Estate

Chart B:

Valuing Your Estate

Chapter 3: The Estate Tax and Gift Tax—How Do They Fit Together?

A. Estate Tax

B. Gift Tax

CHART C:

Estate and Gift Tax Protection 1990-2013

C. The Annual Exclusion

Chapter 4: The Important, but Limited, Role of Revocable Trusts in Estate Tax Planning

ILLUSTRATION I

AB Trust—Estate Tax Protection in 2012

ILLUSTRATION II

AB Trust—Estate Tax Protection in 2013

ILLUSTRATION III

AB Trust—Estate Tax Protection in 2013

Chapter 5: You Can Plan to Avoid the Estate Tax. Overcoming Inertia; Overcoming Objections.

A. Addressing Objections

B. Planning for Long-Term Care

Chapter 6: Estate Tax Planning—The Fundamentals

A. The annual exclusion

B. The remarkable $5 million giving opportunity

(What this book is all about!)

C. Pay tuition for relatives, anyone

D. Pay medical bills for relatives, anyone

Chapter 7: Dynasty or Family Protection Trusts

A. Divorce Protection: Pre-Nup or Post-Nup Planning for Your Kids

B. Litigation Protection

C. Estate Tax Protection for Your Children and Grandchildren

ILLUSTRATION IV

2012 Dynasty Trust GST Allocation

ILLUSTRATION V

2013 Dynasty Trust GST Allocation

Chapter 8: Advanced Estate Planning—What You Can Do to Protect Your Estate

A. The Irrevocable Life Insurance Trust (ILIT)—Supercharging Inherited Wealth

B. Family Limited Partnership: giving away much more than $5 million

C. Limited Liability Corporation

D. Fractional Shares of Real Property

E. Personal Residence Trust (PRT, QPRT)

F. Intentionally Defective Irrevocable Trust (IDIT)

G. Charitable Trust

H. Family Foundation

I. Grantor Retained Annuity Trust (GRAT)

J. Individual Retirement Accounts (IRAs) and

other retirement accounts

K. Disclaiming Inherited Assets

L. Other Planning Opportunities Exist

Chapter 9: Take Action! Protect Your Estate!

8 Step Estate Tax Avoidance Checklist

Bibliography

END NOTES

Dedication

I dedicate this book to Myra Gerson Gilfix, whose advice, support, and insights are a constant source of clarity and inspiration.

Acknowledgments

Particularly when a book is time sensitive, help from others is essential. Fortunately, I had the help I needed. Mark Gerson Gilfix found the publisher and negotiated terms of publication.

I received excellent and timely substantive suggestions from tax attorney Francis A. La Poll, Myra Gerson Gilfix, and Ellen Cookman. They also provided assistance with editing, as did Jamie Arielle Gerson Gilfix. Jamie also served as Production Manager, kept us on schedule, and took care of countless communications with our publisher.

My friend and Stanford Law School classmate Jeffrey Yablon annually publishes a wonderful book, As Certain as Death: Quotations about Taxes. I liberally borrowed quotes contained in his book. I also borrowed many words of Len Tillem, a remarkably insightful radio show host in California’s Northern Bay Area.

Insurance professional Jack Bellevue helped me with insurance illustrations. Don Maruska, my good friend and business coach, offered practical and important guidance about the best approach to maximize success at every level. Many of my friends and colleagues, too many to name here, helped craft an effective title for this book and added extremely useful advice about its circulation and impact. Sincere thanks to all of them.

I thank and acknowledge you, the reader, for sharing this book with others and ensuring its broad distribution.

Finally, I thank our excellent staff at Gilfix & La Poll Associates for their ongoing patience and commitment to quality services for our client community.

Disclaimer

This book is presented solely for educational purposes. The author is not offering it as legal or other professional services advice. Every individual is different and the advice and strategies contained herein may not be suitable for your situation. You should seek the services of a competent professional before implementing a plan to address estate or other tax exposure. Examples are fictional. Any likeness to actual persons, either living or dead, is strictly coincidental.

Glossary of Legal Terms in this Book

AB Trust—A type of Revocable Living Trust used by married couples. In this type of living trust, two trusts (trust A and trust B) are created at the time the first spouse dies. By dividing the couple’s estate into two trusts at the first death, each spouse can pass the maximum amount of property allowed to avoid federal estate taxes. One trust, usually trust A, is often referred to as the Survivor’s Trust or Marital Deduction Trust, and the other trust, usually trust B, is often referred to as the Exemption Trust, Bypass Trust, or Credit Shelter Trust.

Advance Health Care Directive—A document established by an individual (the principal) granting another person (the agent) the right and authority to handle matters related to the health care of the principal.

Annual Exclusion—The amount of property the IRS allows a person