How best to transfer real estate to limit/avoid estate taxes in Texas before 2013 change in tax rate and lifetime gift exemption

Asked almost 2 years ago - Austin, TX

Recently acquired joint ownership interest in south Texas real estate property and I would like to find the best way to transfer surface rights to my children. My primary goal is to limit burdening them with estate taxes while taking advantage of the 2012 gift tax rate and current 5$ million lifetime exclusion. Unsure whether irrevocable trust makes any sense or if I should simply rely on my will. Any options I am not considering?

Attorney answers (4)

  1. Steven M Zelinger

    Pro

    Contributor Level 20

    11

    Lawyers agree

    Answered . I would act quickly to contact an estate planning attorney in your area. The most complicated part of what you are proposing is the valuation of the gift which will require considerable expertise (and perhaps time and expense) so time is ticking. Act now and see an attorney.

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is... more
  2. Orsen E. Paxton III

    Pro

    Contributor Level 18

    9

    Lawyers agree

    Answered . Estate planning is like stacking dominoes. Moving one affects all of them. This plan cannot be evaluated in a vacuum. An experienced estate planning lawyer would need to understand all of your assets and goals and recommend a comprehensive plan. Otherwise it is like a doctor prescribing penicillin without knowing your entire medical history. The penicillin might work on the current infection but if you are allergic to it, there are unpleasant consequences. Austin if full of qualified estate planning lawyers. Seek one out before doing anything.

    DISCLAIMER: This is not specific legal advice and does not establish an attorney/client relationship.
  3. Marty L. Oblasser

    Pro

    Contributor Level 10

    6

    Lawyers agree

    Answered . Time is of the essence and it will become increasingly more difficult to find an attorney who can accomplish your goals before the end of the year. In addition to contacting an attorney quickly, you need to be aware of your different options on the state and federal level. It may be that an irrevocable trust is the only way to remove the assets from your estate for federal tax purposes. However, there are different ways to “wrap” the assets for increased flexibility. One example is, my firm frequently handles high net worth clients who live out of state because we frequently put assets in a close LLC and then we place those close LLCs in a gifting trust. Wyoming is on the cutting edge of excellent LLC and Trust law and provides our clients with more protection and privacy. Bottom line, you will need to contact an attorney immediately and you will want to ensure your attorney is aware of jurisdictional advantages. Depending on your situation, it is likely that just gifting your assets in a will is not the most economical solution.

    I am licensed in Wyoming only. The legal analysis of any situation depends on a variety of factors which cannot be properly represented or accounted for on a web page. The information is intended as general information only, and is not intended to serve as legal advice or as a substitute for legal counsel. If you have a question about a specific factual situation, you should contact an attorney directly.

  4. William Martin Burbank

    Contributor Level 12

    2

    Lawyers agree

    Answered . With just a couple of weeks left, don't give it outright to your kids. You would have to give it all away to avoid the tax. If you just give 1m away this year, then everything else will be subject to the estate tax because you will have used your full $1m exemption. What you should consider doing if your estate is currently $5,000,000 is establishing a intentionally defective grantor trust and fund it with at least $500,000 of liquid assets. Then you can take your time a little because this will set up an option for you to transfer the balance of your estate at a later time using a transaction called a sale to an intentionally defective grantor trust. This is an advanced planning technique but if done well will give you a significant amount of flexibility in the future and still allow you to transfer all of your wealth free of estate tax if the current law sunsets and we are left with a $1m exclusion and a 55% tax.

    These are advanced issues and you need a good Texas attorney to help you. I recomend Julia Nickerson, Esq. http://www.estateplanningaustintexas.com/

    Every situation is different, it is important to discuss your legal issue with a knowledgeable attorney in your... more

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