Running Head: ESTATE PLAN f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f 1
Milestone 1 : The Basic Estate Plan
SNHU
ESTATE PLAN f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f 2
Introduction to an estate planning strategy
Estate planning is the most important part of the preparation tasks collection that helps
to manage an asset base of an individual in the event of their death or incapacitation, including
the settlement of estate taxes and the bequest of assets to heirs. It has been found that the estate
can be taxed at a 40% high rate for not having proper estate planning, which can result in very
high taxes for individuals with high wealth (CDFA, 2023). In the present case, the client owns a
company with $1 billion of fair market value. Here, if the client is not planning their estate in a
proper way, then it could result in paying nearly $400 million of estate taxes by the estate upon
death. It has been identified that many estate planning strategies are there for high-wealth
individuals to avoid gift taxes and paying estate, including limited family partnerships, life
insurance policies, establishing charitable trusts, gifting assets during their lifetime, and a
revocable living trust (CDFA, 2023). Thus, it becomes important for the client to consult with a
professional and experienced estate planning attorney in the real estate industry to determine
the right approach for the specific condition.
In general, the estate covers your house, life insurance, bank accounts, personal
property, and other investments. A client needs to consider all these items while looking for the
estate planning strategy so that it can be equally disbursed. The limited exemption equivalent
can make an individual leave another before incurring estate taxes (DuCharme et al., 2019). For
instance, if the client is married to someone, then they can get double the amount as up to $11.4
million can be received by an individual tax-free, which can lead to a total of $22.8 million.
Similarly, in case you may leave your estate to your two children and give your business 10% to
a third party, then the exemption equivalent would reach $68.4 million, which is the lower
estate amount. In such a scenario, it is always a better decision to specify the client's wishes
through a will that can administer the estate.
ESTATE PLAN f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f 3
Another great estate strategy could be life insurance policies that will allow the client to
avoid estate taxes and provide you with several options to leave money for your children. At the
same time, the client needs to select a beneficiary while setting the life insurance so that the
beneficiary amount will be paid to the person upon the client's death. Another great option could
be transferring the life insurance policy to your children, but if the individual is living for more
than three years after the process of transfer, then the value will not be added to the estate
(Miller & Maine, 2020). Here, the person needs to ensure that the insurance policy is purchased
by one child who can insure them. For example, if the client is making payments under $30,000
per year and paying the insurance premiums, then it will be considered a non-taxable gift
payment. In case the client cannot transfer the policy or does not have the life insurance policy,
then it will be considered tax-free and part of your estate (DuCharme et al., 2019). It has been
identified that the client can take advantage of tax exclusions by transferring property or assets
as gifts during their life to their friends, family, or charities. In the case of a married client, it is
possible to transfer estates without tax liability to the spouse. Moreover, the client needs to
ensure that the spouse is in a lower position before doing this. Transferring the estate of the
spouse to the heirs can help the client to pay fewer taxes on the inheritances. If the client wants
to give 10% of the business to a third party, then the process should be conducted sooner as it
can lower the fair market value of their estate and business.
Introduction to the utilization of limited family partnerships
When focusing on long-term estate planning, it would be wise to create a family limited
partnership. This FLP is a type of partnership that is specially designed to centralize investment
accounts or family businesses by pooling the family assets together into a single partnership
where all the family members have their shares (Vlahos, 2018). If a family limited partnership is
utilized, then it can offer a limited partnership interest in the company to maintain its control.
Here, the client's organization could invest in different commercial and residential properties.
ESTATE PLAN f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f 4
The client's home will be covered by the company, so the company's growth can be ensured
with the mortgage payments. Likely, it will be possible to pay taxes on the fair market value to
the third party and the children. This way, the client can give $30,000 tax-free worth to their
children as a family limited partnership interest.
ESTATE PLAN f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f f 5
References
CDFA, C. (2023). How Portability Can Be an Impactful Estate Planning Strategy. Journal of
Financial Planning, 36(2), 64-67.
CDFA, C. (2023). Prenuptial Agreements and How They Affect Estate Planning. Journal of
Financial Planning, 36(4), 48-51.
DuCharme, J., Rodgers, J., Teague, L. J., Weiant, L., Wigley, M., & Zhang, Y. (2019). Tax
Violations. Am. Crim. L. Rev., 56, 1477.
Wealth Transfer Tax Planning After the Tax Cuts and Jobs Act. BYU L. Rev., 46, 1411.
Vlahos, Lou. "Family Limited Partnerships – They're Still Out There (?)." Tax Law for the
Closely Held Business, 30 Oct. 2018, https://www.taxlawforchb.com/2018/10/family-
limitedpartnerships-theyre-still-out-there/.
