Home in on tax savings with an RPM trust

For those wishing to transfer a personal residence to the next generation at a low tax cost, a remainder purchase marital (RPM) trust is worth a look. Although a qualified personal residence trust (QPRT) is a more common vehicle for transferring a home, an RPM trust offers several advantages. This article looks at the pros and cons of QPRTs, and how RPM trusts can offer a better alternative. (A sidebar gives an example.) On the downside, RPM trusts can cost more than QPRTs, and they aren’t officially sanctioned by the Internal Revenue Code. But by eliminating mortality risk and providing more flexibility, they may well be worth it.
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A formula for estate planning success?

An important goal of many estate plans is to optimize use of the unlimited marital deduction, which allows one to leave any amount of assets to a U.S.-citizen spouse estate-tax free. In many cases, however, leaving too much can cause one to overpay estate taxes. To achieve the best tax result regardless of what the future holds, many people incorporate a marital deduction formula into their estate plans. But formulas aren’t right for every situation, and their impact can change over time, such as when net worth or tax laws change. This article takes a look at the distinction between pecuniary and fractional formulas, and whether it’s necessary to use any formula at all.
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Land, sweet land — Preserve it (and reap tax benefits) with a conservation easement

Those who have the opportunity to buy or inherit a pristine piece of land sometimes want future generations to have the opportunity to enjoy it. They can accomplish this through a conservation easement, which is an agreement to permanently restrict some or all of the development rights associated with the land. One grants the easement to a qualified conservation organization and records it so it’s binding on future owners. Not only does a conservation easement preserve the land, but it offers the donor important income and estate tax savings.
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Estate Planning Pitfall — You’re keeping your trust a secret

Many like to keep their trusts secret because they’re worried that, otherwise, the beneficiaries might spend recklessly or neglect educational or career pursuits. But the law in many states requires trustees to disclose certain information to beneficiaries. One way to avoid the disclosure requirements is by not naming children as beneficiaries and, instead, granting someone else a power of appointment over the trust; however, the power holder is under no legal obligation to provide for the children. So it’s important that those wishing to keep a trust secret be sure to consult an attorney about the law in their state in order to explore alternative strategies.
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