Advanced Estate Planning – Trusts, Tax Strategies and More

Beyond Wills, Advance Directives, Letters of Instruction and Powers of Attorney

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Most everyone should have a Will, an Advance Directive, Letters of Instruction and Financial Powers of Attorney.

However, there are many additional Estate Planning strategies that can preserve wealth, reduce taxes and strengthen your plan.


Perhaps the most important reason to have a trust in addition to a will is if you have any minors who will inherit assets. Minors can not inherit assets directly, they must be put into a trust with a trustee to take care of the assets until they are older.

In general, the legal meaning of a trust is when property is given to a trustee for the benefit of a third person or persons. In many cases, the person setting up the Trust (the Grantor or Trustor) is also the person who maintains the trust (the Trustee) during their lifetime as long as they remain competent. Trusts are most often used in Estate Planning as a way to avoid taxes and probate.

However, a trust can sometimes be expensive to create and administer and there can be negative consequences of putting assets into a trust if – for example – you later require those funds for long term care or other unforeseen circumstances.

A trust should probably be created with the help of a lawyer.

There are two main types of trusts related to estate planning:

  • Irrevocable Living Trusts: An Irrevocable Living Trust is a trust in which the creator has permanently given up control of the assets to the trustee whereby the creator no longer has the legal right to control the assets in the future.

    Irrevocable Living Trusts might be used to:
    • Reduce estate taxes
    • Protect assets from creditors
    • Gain tax efficiencies by distributing assets into a charitable trust.

  • Revocable Living Trusts: A Revocable Living Trust enables the creator to maintain control over or take back their assets that are in the trust.

    You might consider a Revocable Living Trust if you wish:
    • Privacy with regards to your estate
    • To avoid probate

Tax Saving Information and Opportunities Related to Estate Planning

As mentioned earlier, trusts can have tax advantages. But there are various other opportunities to reduce the taxes paid by your Estate.

Gifting Strategies
Giving gifts to your children, grandchildren, charitable foundations or other entities can be emotionally gratifying as well as good for your tax bill or estate.

  • You may give up to $13,000 a year to an individual (or $26,000 if you're married and giving the gift with your spouse) without paying taxes on that amount.
  • You may also pay an UNLIMITED amount of medical and education bills for someone if you pay the expenses directly to the institutions – the school or hospital for example – where they were incurred.

Some people gift money to reduce taxes, others enjoy sharing their wealth with family or good causes while they are still alive.

Estate Tax
Estate taxes are the taxes charged on your assets when you die.

The estate tax was phased out completely in 2010, but only for a year. The tax will be reinstated in 2011 - you can learn more about the limits here:,,id=98968,00.html.

Life Insurance

Life Insurance can be a major part of your Estate. There are also various Estate Planning strategies you can employ using Life Insurance. You may wish to consult with an insurer about a policy that would be applicable to your particular situation.

If you already have a Life Insurance policy, make sure that your beneficiary designations are up to date.


Annuities are sold with a wide variety of features. Many retirees have lifetime annuities to help guarantee their lifetime income. Annuities can also have riders for premium protection which can be granted to a beneficiary upon your death.

If you would like to learn more about an Annuity, continue here. If you already have an annuity, make sure your beneficiary designations are up to date.

Life Insurance Settlements

Life Insurance Settlements — also known as Life Settlements or Senior Life Settlements — are a new type of financial service being popularized by specialized brokerages. These brokerages sell your life insurance policy to institutional investors for typically three to five times the cash surrender value of the policy.

If you have cash or income needs in retirement, a Life Settlement can be a great way to make ends meet, but this strategy can potentially reduce the amount of money you leave to your heirs.

Continue here if you with to learn more about Life Settlements.

Small Business Concerns

There are numerous complex strategies that can be applied to insure that your business continues to operate even after your death. Insurance can be purchased to fund any losses or costs your company might face upon your death or provide adequate funds for a designated successor to buy your shares, etc…

If you are a small business owner, you may wish to speak with a qualified Small Business Retirement Planning expert to help you identify a thorough plan for you and your business.

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