A GST Can Reduce Heavy Estate Tax Erosion
April 18, 2012 By Pyke & Associates, P.C.
When you are a child you are taught to understand right from wrong. Because so much effort is put into making this point to you, unfairness can seem like a very big deal when you are a youngster. Then, little by little, the landscape of childhood starts to pass away, and you come to understand that the way of the world as we know it is inherently unfair in some ways. But that doesn't mean you lose your ability to see right from wrong.
When you look at the estate tax from a childlike perspective without any kind of prejudice or jaded expectation of unfairness it is really difficult to accept. Here is a tax, coming in at a heavy 35%, that taxes money that is left over after you have paid your taxes all of your life.
While you were alive, these assets were not subject to a tax just because they existed. But the minute you die the federal government imposes a “death tax,” and it really is just that because it was your passing that triggered the imposition of the tax. And guess what? The remainder that does pass to your heirs after they pay the estate tax will be taxed repeatedly when it is passed on to succeeding generations.
This is simply not Fairland one way that you can protect your legacy from at least some of this erosion is through the creation of a generation skipping trust. With these vehicles you name your grandchildren as the beneficiaries, in essence “skipping” over your children. However, your children can benefit from the trust throughout their lives, receiving income and using property placed in the trust.When your children die, your grandchildren inherit the trust property, and in the end the estate tax is due just once though the assets passed through two generations for all intents and purposes.
ABOUT THE AUTHOR: Charles Pyke
Experienced estate planning attorneys Atlanta GA of the Pyke & Associates P.C. offers estate planning and business planning resources to residents of Atlanta GA.
Copyright Pyke & Associates, P.C.
More information about Pyke & Associates, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
While you were alive, these assets were not subject to a tax just because they existed. But the minute you die the federal government imposes a “death tax,” and it really is just that because it was your passing that triggered the imposition of the tax. And guess what? The remainder that does pass to your heirs after they pay the estate tax will be taxed repeatedly when it is passed on to succeeding generations.
This is simply not Fairland one way that you can protect your legacy from at least some of this erosion is through the creation of a generation skipping trust. With these vehicles you name your grandchildren as the beneficiaries, in essence “skipping” over your children. However, your children can benefit from the trust throughout their lives, receiving income and using property placed in the trust.When your children die, your grandchildren inherit the trust property, and in the end the estate tax is due just once though the assets passed through two generations for all intents and purposes.
ABOUT THE AUTHOR: Charles Pyke
Experienced estate planning attorneys Atlanta GA of the Pyke & Associates P.C. offers estate planning and business planning resources to residents of Atlanta GA.
Copyright Pyke & Associates, P.C.
More information about Pyke & Associates, P.C.
View all articles published by Pyke & Associates, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
