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Each year a person could make a gift of up to $10,000 to an unlimited number of individuals without reducing his/her Unified Credit. Each annual gift could generate an immediate federal gift tax savings of up to $6,000. Every year that one does not make such a gift, it is lost and gone forever. Gifts of tuition are not counted against this $10,000 if they are paid directly to the school.

A type of irrevocable trust that allows a person to receive income for his/her life and typically, the life of the person's spouse. The income is derived from property transferred to the Trust as a gift. The Charitable Remainder Trust doesn't pay taxes on any income derived from the sale or investment of its assets. When the Donor (the person creating the Charitable Remainder Trust) and the Donor's spouse have both died, the income payments cease and the remaining trust property is distributed to one or more charitable organizations designated by the donor (and/or the Donor's spouse, including a Family Foundation or Donor Advised Fund.

A special form of fund under the flagship of a community charitable organization that is exempt from federal and state income tax. A Donor Advised Fund may be directed by the members of one family. The Donor Advised Fund is one choice for the charitable organization that will receive some portion of, or all of the assets that would otherwise be subject to estate tax.

A legal arrangement created primarily for the purpose of owning insurance on the life of the person(s) who created the Trust. If the Trust is properly designed, the death benefit from the insurance will not be subject to tax in the estates of the insured person, his or her spouse, and one or more generations of heirs.

Some of the current thinking in estate planning goes in the direction of Total Wealth Control. It proceeds from the realization that it is not possible to pass all of one's wealth directly to children or other heirs without losing 50% or more of the estate in the form of taxes. However, with Total Wealth Control,it is possible to replace the tax with a charitable gift, which can be structured as an integral part of the legacy to the children. The choice is yours.

Under the federal gift and estate tax system, a person may transfer up to $600,000 by gift during life, or by Will or other arrangement at death-with no tax liability. With proper planning, a husband and wife should be able to "shelter" or protect a total of $1,200,000 in assets from any tax liability. Unlike fine wine, the Credit does not become more valuable with age.

Property transferred from one spouse to another, either during lifetime or upon death, will generally qualify for a deduction for federal gift or estate tax purposes. The marital deduction is unlimited, so that with proper planning there will be no tax due on the death of the first spouse. However, all property that qualified for the marital deduction will ordinarily be subject to gift or estate tax when it is transferred by the surviving spouse.

A form of irrevocable trust funded with gifts of property that will nto be subject to estate tax. It is often used in place of the Irrevocable Life Insurance Trust, although a Wealth Replacement Trust may hold assets other than, or in addition to, an insurance policy. The primary purpose of a Wealth Replacement Trust is to help assure an inheritance for children or other heirs by replacing property that would either be taken by the government in the form of estate taxes, or else be given to one or more charities as part of a Zero Estate Tax Plan. The Trust may also provide significant asset protection.

A type of Total Wealth Control that begins with the premise that persons who have substantial wealth can choose their own form of Social Capital: heavy estate taxes, or charitable gift. Building upon this premise, clients and their advisors use a flexible array of estate and business planning arrangements that enable the clients to provide the desired amount and form of inheritance for their children and other heirs, while maintaining the desired level of family control over that portion of their estates that is earmarked for public or social benefits. The Zero Estate Tax Plan may result in no federal or state estate tax being paid. These same tools can also be used to reduce estate taxes.

In a Rabbi Trust arrangement, the employer contributes a certain amount to the Trust each year while the employee is providing services for the employer. Ideally, the employer will accumulate enough funds in the trust to cover the payments which will be required when the employee attains retirement age, thus avoiding a cash crunch for the employer. Under this arrangement, the employee is not taxed on any amounts until he or she receives payments. The employer is treated as the owner of the assets of the Rabbi Trust. This vehicle is often used in connection with a non qualified deferred compensation plan and may be funded by using a life insurance policy, providing security for the employee.

These definitions are for information purposes only. Please consult your own professional advisors for tax, legal or accounting advice.