One of the first things to take into consideration when you are evaluating your financial position as it applies to estate planning will be your tax exposure. The Federal estate tax is an issue for a lot of people right now and it is going to be a matter of concern for many more individuals next year.
At the current time there is a $5.12 million estate tax exclusion. This means that your first $5.12 million can be passed along to your heirs free of taxation.
However, this figure plummets to just $1 million next year when the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 expires. And, in 2013 the rate is scheduled to rise from the rather high 35% that is in place right now all the way up to a somewhat jaw-dropping 55%.
If you are exposed to the tax you must take action. One tax efficiency vehicle that is sometimes utilized is the family limited partnership.
You place funds into the partnership and you act as the general partner. You can then give shares in the partnership to family members and they become limited partners.
Giving shares to the limited partners is considered to be a taxable gift. But because the limited partners have no rights of marketability or control their shares are not taxed at their full market value. Plus, transfers between partners can take place at a tax discount as well.
To learn all the details about family limited partnerships simply take a moment to arrange for a consultation with a seasoned, savvy Willoughby OH estate planning lawyer.