{"id":58,"date":"2011-06-06T17:07:03","date_gmt":"2011-06-06T17:07:03","guid":{"rendered":"https:\/\/www.jacksonwhitelaw.com\/arizona-estate-planning\/?page_id=58"},"modified":"2022-08-24T20:25:26","modified_gmt":"2022-08-24T20:25:26","slug":"estate-tax-planning","status":"publish","type":"post","link":"https:\/\/www.jacksonwhitelaw.com\/arizona-estate-planning\/blog\/estate-tax-planning\/","title":{"rendered":"Estate Tax Planning"},"content":{"rendered":"

Introduction<\/h3>\n

Estate taxes play a major role in developing and funding an effective estate plan. In Arizona, estate taxes can be imposed on property that is left to an heir when a person passes away. Gift taxes can also be imposed when one person gifts or transfers assets to another while they are still alive. Unfortunately, these types of taxes can cost people an exorbitant amount of time and money.<\/p>\n

Reducing taxes is a very important, yet often overlooked component of an estate plan. While estate taxes cannot be complete eliminated, they can be significantly reduced by planning and implementing different strategies in advance. There are a number of sophisticated estate tax planning strategies can maximize the return on a person\u2019s hard-earned investment, and preserve their wealth for future generations.<\/p>\n

Living Trusts & AB Trusts<\/h4>\n

A living trust is a trust designed to avoid probate and provide asset management. This type of trust is created while a person is still alive instead of being created at their death under the terms of their will. A person can also be the trustee of their own living trust and keep full control over all of the property contained within that trust. In instances where a basic living trust does not maximize a couple\u2019s unified credit, an AB Trust is generally recommended instead. AB trusts can reduce federal estate tax for married couples with lots of valuable assets. An Arizona estate planning attorney can help individuals in Phoenix\u2019s east valley decide on which type of trust best suits their circumstances.<\/p>\n

Wealth Replacement Strategies<\/h4>\n

An irrevocable life insurance trust (ILIT), also known as a wealth replacement trust, is a trust funded in part by life insurance policies or proceeds. ILITs can minimize estate taxes and serve as a source of liquid funds to an individual\u2019s estate for the payment of different expenses, such as taxes or debts. When an individual passes away, their assets, as well as their life insurance policies and proceeds, can be subject to federal estate taxes. As a result, a person\u2019s family members may receive less money from the policy than originally planned. An ILIT help a person completely eliminate this problem in some instances. Further, an ILIT can be especially helpful in cases where an estate is subject to estate taxes only because of life insurance policy proceeds.<\/p>\n

Other types of wealth replacement strategies include ILITs in combination with charitable gifting strategies as well as Charitable Gift Annuities. Since wealth replacement strategies can become very complex, individuals in Arizona should retain an Arizona estate planning attorney who can help them select an appropriate strategy.<\/p>\n

\n

Gifting Strategies<\/h4>\n

1. Discount Gifting<\/h4>\n

There are a couple of different discount gifting strategies that can be used to enhance an estate plan,
\nsuch as:<\/p>\n