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Clintons utilize trust planning strategy to avoid estate taxes

Everybody in society needs to pay their fair share; however, nobody wants to pay more taxes than they need to. Bill and Hillary Clinton seem to have taken this approach in their political positions and their personal estate administration plans. As many in Maryland may remember, the Clintons have been strong supporters of legislation to raise the estate tax. On the other hand, the Clintons’ estate planning strategies show they are doing whatever they can to avoid having to pay estate taxes themselves through the use of trust planning.

This type of estate planning strategy is used by all types of people, but it can be especially effective for those with a high level of income and assets, such as the Clintons. Trusts help shield assets from being hit with estate tax charges. This can be significant since the estate tax can take as much as 40 percent of one’s assets following death. The Clintons are doing whatever they can to avoid the impact of estate taxes.

They have done this by putting the ownership of one of their homes into a residence trust in 2011. The residence trust, which was created in 2010, shields appreciation of the property’s value from being liable for estate taxes. By using this type of trust planning strategy, the Clintons have saved their intended heirs from having to pay large amounts of estate taxes. Although the Clintons supported lowering the exemptions for estate taxes to $3.5 million per person, the estate tax exemption level is now $5.34 million per person.

However, just like anybody in Maryland or any other state, the Clintons will have to pay attention to any changes to estate planning laws in order to adjust their trust planning accordingly. Also, changes to one’s personal life, such as divorce or remarriage, can significantly affect one’s estate planning strategies. Therefore, it is important to update one’s estate plan periodically.

Source: Bloomberg, "Wealthy Clintons Use Trusts to Limit Estate Tax They Back", Richard Rubin, June 16, 2014

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