Advanced International Estate Planning

To the extent that a taxable estate exceeds $5.45 million, it is subject to estate tax at a rate of 40%.  One goal of estate planning is to reduce an estate value for estate tax purposes to an amount below $5.45 and to do so without impairing its economic value.

Achieving that goal for even the largest estate is feasible through aggressive planning that is started early enough.  Two considerations make a properly structured international trust the ideal environment for such planning.

First, with an international trust, property can be removed from an individual’s estate even while it remains potentially available for the individual’s support.  Second, such a trust provides a permanent solution for the estate tax problem, since (i) the trust eventually removes property from the U.S. tax system and (ii) the trust can be perpetual.

The pages that follow discuss estate planning solutions in the context of a Model Offshore Trust.  That form of trust is well suited for thorough estate planning because its terms include a power in the Trustee to establish rights and preferences for groups of Beneficiaries that remove property from the Grantor’s taxable estate.  That power in the Trustee also makes the Trust highly effective for planning that avoids generation-skipping tax.

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Topic Index for Advanced International Estate Planning

Gift & Estate Tax Treatment of a Model Offshore Trust

Offshore Estate Planning — the Red and the Green

Stopping Tax on Red Portion

Estate Planning Tool for Your Heirs

Generation-Skipping Tax

Model Offshore Trust and Generation-Skipping Tax