Estate planning can be very complicated and technical and if not done, or not done correctly, can result in unexpected expenses and taxes. Below are some techniques used in most estate plans.
A disclaimer is a refusal to accept money or other property by someone who would otherwise be your beneficiary according to your will, trust, gift, insurance policy, retirement account, or your state’s intestacy laws. The person who disclaims the property (the “disclaimant”) is treated as if he or she predeceased you and never received the property.
There are several situations where a potential beneficiary might want to forgo property to which he or she is entitled. Often, these situations can be anticipated, and a disclaimer trust can be created to receive disclaimed property,which is then administered and distributed according to the terms of the trust.
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Bypass Trust – Credit Shelter Trust
A bypass trust is a trust that is utilized by married couples to reduce estate taxes. This trust must be created in the original will or living trust prior to the death of the first spouse.
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Irrevocable Life Insurance Trust
An irrevocable life insurance trust (ILIT; pronounced “eyelet” and also called a wealth replacement trust) is a trust that is funded, at least in part, by life insurance policies or proceeds. It is an effective estate planning tool that, if properly structured, may help avoid generation-skipping transfer, gift, and estate taxes, while providing a source of liquid funds to your estate for the payment of taxes, debts, and expenses.
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