Warning: Illegal string offset 'src' in /home/shenklaw/public_html/laweasy.com/wp-content/themes/laweasy/single-tips.php on line 45
< Back to

Obama’s Proposals for Tax on High Earners

Obama’s Proposals for Tax on High Earners

By: Martin M. Shenkman, CPA, MBA, JD

What To Do with New Taxes on High Income Earners Money Matters Radio – Estate Planning Q&A with Gary Goldberg By: Martin M. Shenkman, Esq. Introduction/Overview:  President Obama is proposing tax increases on the wealthy. If you’re in that category what can you do?

question
Can high income earners do more than take it on the chin?
answer
Certainly. First, let’s mention some of the old standbys, then I will mention some more creative planning ideas.
  • Tax exempt bonds will look better for those affected by higher rates.
  • Permanent life insurance and annuity products that have a tax free build up in growth will look better.
question
What about trusts?
answer
Many wealthy taxpayers have set up trusts that were intentionally made taxable to the person setting them up for income tax purposes. These are referred to as grantor trusts. For some, it might be advantageous to reconsider whether the trusts should continue to be taxed in that manner or whether there may be an advantage to having the trust pay the tax. People with grantor trusts should talk to both their CPA and estate planning attorney about the pros and cons of a change if the law is enacted.
question
What about family limited partnerships?
answer
Family limited partnerships (FLPs), and family limited liability companies (LLCs), have been used for many years primarily for estate and gift tax savings. Higher taxes on the wealthiest earners will create a greater spread in tax rates from the lowest to the highest. This may make a more traditional use of FLPs and LLCs again of paramount importance — shifting income to lower bracket family members. If taxpayers gift FLP or LLC interests to heirs in lower brackets, they may be able to pay income tax at their low rates on their portion of partnership earnings.

Our Consumer Webcasts and Blogs

Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.

Ad Space