The Incredible Shrinking Estate

When it comes to estate tax liability for high-net-worth families, small is good. That's why the gift tax statutes, which can be used to shrink not only the current taxable estate, but also future earnings and asset appreciation, is a key weapon in the hands of savvy CPAs. In fact, effective use of the gift tax statutes can help bring about "The Incredible Shrinking Estate." It's not uncommon however, that parents or grandparents want their offspring to be more mature before they receive a sizable amount of money. In that case, CPAs and other professionals may turn to certain types of Trust vehicles or perhaps a Family Limited Partnership. Another strategy for maximizing an inheritance is the use of an Irrevocable Life Insurance Trust. With a GRAT, an individual makes a gift to a trust and sets terms to have that money paid back as an annuity over a period of years.