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Optimizing Estate Planning: Tandem Trust Plan vs Current Plan

This article compares the current estate plan with the proposed Tandem Trust plan, analyzing the potential tax savings and net value for the family. Find out how the Tandem Trust plan can help optimize estate planning by considering a 3.5% discount rate.

meganadams
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Optimizing Estate Planning: Tandem Trust Plan vs Current Plan

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  1. 2nd Death Occurs CURRENT ESTATE PLAN... ESTATE Heirs Outright $4,072,538 Estate Tax $2,864,212 (plus $63,250 in settlement charges Charitable Organizations $-0-

  2. ESTATE TAX CALCULATION... ESTATE………………………….$6,325,000 COSTS……………………………...($63,250) NET TAXABLE ESTATE………$6,261,750 TENTATIVE TAX……………….$3,084,762

  3. UNIFIED CREDIT………………….$220,550 ESTATE TAX……………………..$2,864,212 NET TO FAMILY………………...$3,397,538 FIRST DECEASED’S ESTATE + $675,000 Outright $4,072,538 to heirs

  4. 2nd Death Occurs PROPOSED ESTATE PLAN... RICH’S ESTATE Lead Trust $2,600,000 Remainder Trust $2,600,000 Estate Tax $1,036,265 + $63,250 Heirs Outright $700,485

  5. Lead Trust $2,600,000 Remainder Trust $2,600,000 10% 6.25% Income Income each each year year (Charity) (Heirs) 15 Years Pass (Charity) (Heirs)

  6. A LOOK AT THE APPROXIMATE DEDUCTIONS… USED TO LOWER THE RICH’S ESTATE VALUE (assumed AFR of 8.0%)

  7. A LOOK AT THE APPROXIMATE DEDUCTIONS... ESTATE VALUE…………………………….$6,325,000 • 1% for settlement charges…………………..($63,250) • $6,261,750 • *Charitable estate deduction • for a 15-year, 6.25% payout • CRT funded with $2,600,000……………...($1,034,751) • * Charitable estate deduction • for a 15-year, 10% CLAT • funded with $2,600,000…………………...($2,291,121) • TAXABLE ESTATE…….……..…$2,935,878

  8. Tentative Tax……………………...…………..$1,256,815 • Unified Credit…..………….……………………$220,550 Estate Tax due………………$1,036,265 * NOTE:Deductions available at the time this case illustration was created

  9. NET EFFECT OF CURRENT ESTATE PLAN versus TANDEM TRUST ESTATE PLAN CURRENT ESTATE PLAN VS TANDEM PLAN NET - PRESENT VALUE ASSUMING 3.5% DISCOUNT

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