Wealth Preservation Strategies Enhance Estate Planning

Mark Ziebold, founder of the Ziebold Law Group, is a graduate from Baylor University in Texas with a degree in Economics. He is also an attorney specialized in taxation and estate planning after obtaining his JD and LLM (taxation) from the Chapman University of Law. Mark Ziebold is a certified asset protection planner and an accredited wealth preservation planner from the Wealth Preservation Institute.

Estate planning refers to the process of managing and preserving a person's wealth while alive, plus sharing said wealth after death with one's heirs or selected beneficiaries. Wealth preservation goes beyond protecting owners' wealth for themselves and their families; it entails maintaining the owner's income and assets, including their estates. However, estate planning differs from one person to another because many factors are considered before planning, including the owner's profile, goals, current circumstance, and time frame.

There are simple wealth preservation strategies that enhance estate planning, including trust planning, gifting, charitable giving strategies, and coordinating with financial advisers to implement principal protected investment strategies. Wealth preservation planners ensure that annual gifting tax exclusion is wholly incorporated into estate planning. They may also advise the need for alternative investments, an increase in the use of liquid assets, and buying annuities and bonds. Another strategy employed to preserve and pass along wealth to an offspring and their children is long-term life insurance.

The Five Different Types of Trust

The president of Ziebold Law Group, Attorney Mark Ziebold belongs to the elite group of California lawyers who specialize in the areas of taxation and estate planning, trust, and probate law. Attorney Mark Ziebold also serves as a private fiduciary on various types of trusts.

A trust is a legal means to allow a third party, called trustee, to manage assets on behalf of a beneficiary. A trust offers a wide range of options to manage the assets, especially when the maker wants to pass on the assets to his or her children or to shield the assets from taxes. Below are five different types of trusts among various types that are used in estate planning applications:

1. The credit-shelter trust, also known as a bypass trust, holds an amount of property passed by the decedent up to the estate tax exemption. The rest of the estate is administered pursuant to the remaining estate planning documents and this trust usually provides for the spouse for life and then passes the assets on to other heirs without estate taxes.

2. The generation-skipping trust or dynasty trust allows for the transfer of a substantial amount of assets free of estate tax and generation skipping transfer taxes to beneficiaries at least two generations younger. Typically, this type of trust provides ongoing benefits to grandchildren and more remote descendants for as long as the trust remains in effect.

3. The qualified personal residence trust (QPRT) removes the value of the family home or the vacation home from the estate at a discounted value, especially when such properties have the potential to increase in value over time.

4. The irrevocable life insurance trust (ILIT) removes life insurance policies from the taxable estate of the owner of the policy. When the policy is removed from the estate, the policy is owned by the trust and therefore the beneficiaries of the trust can benefit from the policy by actions taken from the Trustee of the ILIT. The proceeds from the life insurance can be used in a variety of ways to benefit the heirs or beneficiaries after the maker dies.

5. The qualified terminable interest property trust (QTIP) is preferred by people involved in divorces and re-marriages. Under the QTIP, the maker can direct his or her assets to particular relatives after the death of the surviving spouse but continue to benefit the surviving spouse for his or her life. The surviving spouse must receive all income from the trust while the specified beneficiaries receive the principal or the remainder of after the surviving spouse passes away.