We believe that family matters, and strive to provide personal care and attention to each of our clients. We believe in understanding the needs of individuals and their families in making estate-planning decisions. This enables us to create a customized plan that will fit each client's particular needs. With over 25 years of legal experience, Jones Law Office, PLLC has developed a respected reputation in the legal community. With the Jones Law Office as your advocate, you will have the services of attorneys who know the law and how to best protect you and your loved ones. You will have allies who care about and watch out for your best interests. Contact us now to help you devise the right estate planning services for your needs.

Tax Planning and Trusts

When Congress passed the Economic Recovery Tax Act of 1981 (ERTA), several major changes were made to the wealth transfer taxation scheme. Further changes resulted from the Taxpayer Relief Act of 1997 (TRA), The Economic Growth and Tax Relief Reconciliation Act of 2001(EGTRRA), the American Taxpayer Act of 2013 (ATRA), and the Tax Cuts and Jobs Act of 2018 (TCJA).

An unlimited marital deduction was created for all transfers by gift, trust, or inheritance between husband and wife, so long as the parties are legally married and each is a U.S. citizen.

An annual gift exclusion of $16,000 (2019) is the amount any person can give to another person in a single tax year without any federal gift tax consequence. The ATRA has provided an adjustment for inflation, but only in increments of $1,000. The number of gifts per year to different people is currently unlimited. A married couple can give $32,000 if they file a gift tax return.

A unified credit for estate and gift taxes is available to all citizens. The unified credit creates an effective lifetime exemption equivalent of $12.06 million, which is the amount any citizen can pass by gift or inheritance totally free of federal estate or gift tax (2022 tax year under TCJA).

By proper tax planning, a husband and wife will eventually be able to pass an estate of $24.12 million free of federal estate and gift tax. This may only be achieved properly through use of a trust and other tools. In addition, the trust must be properly drafted to take advantage of the constantly changing Federal and State laws.

In Oklahoma there is no Estate tax.

The generation-skipping transfer tax is a flat 40% tax designed to penalize transfers to a younger generation which have skipped an intervening living generation, such as grandparent to grandchild, bypassing the child. The GST tax lifetime exemption is $12.06 million in 2022.

Advanced Planning Techniques

Once a family's total estate has grown beyond $24.12 million, or the estate of a single person beyond $12.06 million (the current exemption equivalent levels for 2022), more sophisticated and advanced techniques need to be considered to allow the family or individual to cope with the heavy burdens of estate taxes and estate administration costs. Here are some of the more popular choices:

• Irrevocable life insurance trusts --One of the few estate tax shelters left today, an ILIT allows the owner of an insurance policy to exclude the insurance death benefit from his or her taxable estate. These are often set up and funded with special second to-die life insurance policies as a means of proving the liquidity to pay estate taxes.
• Limited or Family limited partnerships --An old concept now used for a modern purpose, the LP/FLP allows the taxpayer to distribute the assets of a family business amongst various family members and beneficiaries during lifetime. The primary tax benefit is the ability to take advantage of minority and marketability discounts in appraising the estate, which can reduce the taxable value of a business by 35% or more.
• Charitable remainder unitrusts --This is a special type of trust which allows the taxpayer to contribute highly appreciated assets to a charity, but during the lifetime of the donor and spouse, receive an annual income payment. A CRUT provides a triple tax deduction: capital gain income tax on appreciated property is avoided, a charitable income tax deduction is available, and the gifted assets are removed from the taxable estate. CRUTs are often used as a substitute for retirement funds for highly compensated individuals such as physicians and surgeons.