[WSBAPT] Estate Planning for Single Person (Might Involve Estate Tax)

[Derek Johnson]

Hi John,

Unfortunately, there are not a lot of options for single people wishing to avoid paying estate taxes without a living trust, except simply having a smaller estate. In your hypothetical, the individual could make yearly gifts directly to his potential beneficiaries equal to or less than the annual exclusion ($14,000 each). This would work to bring down his total estate value.

If he has any business or real estate interests, he could start to give small portions of those interests to the beneficiaries to bring his estate down as well. Again, if he has real estate or some property of value, he could contribute it to an LLC and then gift small portions of the LLC ownership to the potential beneficiaries and utilize the marketability and minority ownership discounts to give over more value, quicker.

At the end of the day the easiest thing to do would be to create a simple living trust with Crumey powers and 5 or 5 clause. It would be pretty simple since it would be there essentially to sit and gather money, there would be very little income to deal with and almost no need to maintain it. He could gift $14,000/year per person to the trust and have it distribute upon his death.

Hope that helps.

Derek Johnson, J.D.
Gravis Law, PLLC
710 George Washington Way, Suite A
PO Box 840
Richland, WA 99352
Tel: 509.380.9102
derek at gravislaw.com

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John Yip
Sent: Saturday, July 29, 2017 12:55 PM
To: WSBARP at lists.wsbarppt.com; wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Estate Planning for Single Person (Might Involve Estate Tax)

Hello,
Here is the hypothetical situation: Single person wants estate planning, and his estate may be slightly over the Washington State estate tax threshold.  He wants to leave his estate to multiple beneficiaries.  However, he does not want an inter vivos trust.
In that case, would a Will with disclaimer trust provisions make sense?  Disclaimer trusts rely upon the Marital Deduction and the QTIP exceptions, which are unavailable to single persons, correct?  Also, wouldn't it be messy to set up a disclaimer trust when there are multiple beneficiaries, as some might not be willing to disclaim?
If a Will with disclaimer trust provisions would not make sense for the above hypothetical, what are some alternatives I could use for the single person's estate planning other than to set up an inter vivos trust?
Thanks,
John
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