Tax Planning & Asset Protection

“Over and over again, courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor, and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced extractions, not voluntary contributions.”

Judge Learned Hand. Commissioner v. Newman.

Integration of Asset Protection Planning into an Estate Plan

Tax Planning is the process of arranging one’s financial affairs to optimize tax liabilities. Over the last decades the concept of a “typical” estate plan has expanded and evolved in direct proportion to the increasing size of the average estate. For families with an interest in tax planning, the typical arrangement would also include tax savings mechanisms such as Irrevocable Family Trusts, Grantor Retained Annuity Trusts, Family Limited Partnerships, and Charitable Foundations.

Although estate planners will continue to add new tax savings devices to their arsenals in response to the ever-changing tax laws, the most likely challenge for planners going forward will be to integrate asset protection planning into the estate plan. This will range from relatively simple changes relating to dispositive and trustee powers provisions in standard documents to full-blown asset protection plans built around lifetime gifting and charitable contributions.

Post-Mortem Tax Planning

An important part of our practice involves assisting clients in making various elections for tax purposes after a death has occurred. This includes decisions on whether to claim available deductions on estate or income tax returns, whether to use date-of-death values or alternate valuation date values for estate tax purposes, whether to file joint income tax returns with a surviving spouse or to consent for gift tax purposes to treat gifts as if made equally by a decedent and spouse. Other planning decisions involve income tax planning, selection of fiscal years for income tax purposes, timing of distributions, making qualified terminable interest property elections, the appropriate use of disclaimers, funding of trusts with selected assets, the allocation and use of generation-skipping transfer tax exemptions, and many other tax planning elections.

Special Needs Planning

Special Needs Planning plays an important role for families striving to meet current and future financial and medical needs of a disabled family member. Through the use of various types of “special needs trusts” you can preserve a disabled person’s entitlement to various government benefit programs designed for people with disabilities. These trusts are also used to preserve personal injury judgments for individuals who have been severely injured and disabled due to an accident. The overall goal of Special Needs Planning is to substantially improve the life of the disabled individuals by preserving public assistance benefits; providing for cost effective medical treatment coverage and establishing a way to effectively manage the disabled person’s financial resources.

The following descriptions are representative of Silverman Thompson’s work in asset protection and tax planning:

  • Preparing prenuptial and post-nuptial agreements and other intra-family documents that affect clients’ estates
  • Representing petitioners or other affected parties in connection with guardianship and conservatorship proceedings
  • Preparing clients gift, Federal and Estate tax Returns
  • Advising corporate fiduciaries and private trustee offices on establishment and management of fiduciary businesses and identifying and managing fiduciary risk
  • Working to avoid litigation, but when disputes arise, using our considerable capabilities and resources to devise effective litigation strategies and negotiate sophisticated settlements
  • Advising nonprofit and charitable organizations on the implementation and administration of planned giving programs, the establishment and maintenance of 501 (c) (3) tax-exempt status, corporate and governance issues, and state and federal regulations applicable to nonprofit and charitable organizations

We invite you to contact us or call our office at 410.385.2225 or 800.385.2243 for a complimentary consultation to see how we can make a difference for you.

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