The objective of this discussion is to review some of the myths and realities of estate planning. Several articles have been written on this topic, but let's see if you can't reverse it by keeping it simple.
The 2001 Tax Coordination and Growth Facilitation Act (EGTRRA) has trapped many people in real estate planning. Tax laws are never easy, but EGTRRA has added a level of confusion rarely seen in advanced planning. You can find the best estate planning advice online.
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Myth: Due to the uncertainty of tax laws, you should avoid using a life insurance trust.
The Irrevocable Life Insurance Trust (ILIT) is probably the most important insurance-related real estate planning tool you could ever want. The irrevocable nature of the trust can result in real estate tax savings, while insurance offers an inexpensive way to pay real estate taxes.
The reputation of an irrevocable life insurance trust is that the proceeds from the policy are not included in the assets of the insured.
Myth: The reform or abolition of the property tax means the end of the donation system.
Donating to charity is emotionally rewarding. The IRS also gives you income tax breaks for charitable donations. You can use a charitable giving strategy as a technique to reduce or freeze the value of your property.
Some have complained about the possibility of repealing or reforming property taxes, arguing that it would significantly reduce charitable giving. The argument is that if fewer properties are subject to property taxes, fewer people are willing to engage in charitable giving as a property tax reduction strategy.