Life Insurance
can help meet your estate and gift tax li-
DELOLWLHV /LIH LQVXUDQFHRIWHQSURYLGHVDVXEVWDQWLDO EHQHÀW
for relatively small costs. A life insurance policy may be
used by itself to increase the size of your estate, or it may
be used for cost-effectively paying estate taxes. Plus, the
proceeds of life insurance are typically income-tax free to
WKH EHQHÀFLDU\ $QG ZLWK FDUHIXO SODQQLQJ WKHVH SURFHHGV
may also be received estate-tax free.
A Limited Liability Company (LLC)
or
Family Limited
Partnership (FLP)
mayhelp reduce thesizeof your estate
IRU WUDQVIHU WD[ SXUSRVHV 7KH //& RU )/3 LV PDGH XS RI
managing or voting interests and nonvoting interests, and
you could gift the nonvoting interests to your children and
grandchildren
2
. Since the non-voting interests gifted to
your children and grandchildren lack voting rights and are
not readilymarketable, theymight bediscounted for gift tax
valuation purposes
3
.
A Dynasty Trust
could allow you to establish a source
of funds for multiple generations. Here’s how it generally
works: Youwould fund the trust with an amount up to your
and your spouse’s lifetimegift tax exclusions. The trust as-
sets, including any growth, will remain free of federal transfer
Insurance products are offered in conjunctionwithMorganStanleySmithBarney’s licensed insurance
DJHQF\ DIÀOLDWHV
> @ 7KLV DPRXQW PD\ EHDGMXVWHG DQQXDOO\ IRU LQÁDWLRQ
> @ <RX VKRXOG FRQVXOW ZLWK \RXU OHJDO RU WD[ DGYLVRU DERXW //&RU )/3SODQQLQJDQG WKHSRWHQWLDO WD[
FRQVHTXHQFHV 7KH ,56PD\ FKDOOHQJH WKLV SODQQLQJDQG WDNH WKHSRVLWLRQ WKDW JLIWHG //&RU )/3
LQWHUHVWV DQGRU XQGHUO\LQJ //&)/3DVVHWV DUH LQFOXGDEOH LQ WKHGRQRU V HVWDWH
> @ <RX VKRXOG FRQVXOW ZLWKDTXDOLÀHGDSSUDLVHU WRGHWHUPLQH WKHDSSURSULDWH DPRXQW RI WKH YDOXDWLRQ
discounts.
ArticlebyMcGrawHill and provided courtesy of MorganStanleyWealthManagement Financial Advisor.
7KHDXWKRU V DUHQRW HPSOR\HHV RI 0RUJDQ6WDQOH\6PLWK%DUQH\ //& ´066%µ 7KHRSLQLRQV
H[SUHVVHGE\ WKHDXWKRUV DUH VROHO\ WKHLU RZQDQGGRQRW QHFHVVDULO\ UHÁHFW WKRVHRI 066% 7KH
informationand data in the article or publication has been obtained from sources outsideof MSSBand
MSSBmakes no representations or guarantees as to the accuracy or completeness of informationor
data from sources outsideof MSSB. Neither the information provided nor any opinion expressed
constitutes a solicitation byMSSBwith respect to the purchase or sale of any security, investment,
strategy or product that may bementioned.
0RUJDQ6WDQOH\6PLWK%DUQH\ )LQDQFLDO $GYLVRU V HQJDJHG&HOHEUDWHG/LYLQJ WR IHDWXUH WKLV DUWLFOH
$GDP( &DUOLQPD\ RQO\ WUDQVDFW EXVLQHVV LQ VWDWHVZKHUHKH LV UHJLVWHUHGRU H[FOXGHGRU H[HPSWHG
from registration
/. Transacting business, follow-upand
individualized responses involvingeither effecting or attempting to effect transactions in securities, or
the rendering of personalized investment advice for compensation, will not bemade to persons in states
ZKHUH$GDP( &DUOLQ LV QRW UHJLVWHUHGRU H[FOXGHGRU H[HPSW IURPUHJLVWUDWLRQ
0RUJDQ6WDQOH\6PLWK%DUQH\ //&DQG LWV DIÀOLDWHV GRQRW SURYLGH WD[ RU OHJDO DGYLFH 7R WKH H[WHQW WKDW
thismaterial or any attachment concerns taxmatters, it is not intended to beused and cannot be used
by a taxpayer for the purpose of avoiding penalties that may be imposedby law. Any such taxpayer
should seek advicebased on the taxpayer’s particular circumstances froman independent tax advisor
and formatters involving taxation and tax planning and their attorney formatters involving trusts, estate
planning, charitable giving, philanthropic planning or other legal matters.
,QYHVWPHQWV DQG VHUYLFHV RIIHUHG WKURXJK0RUJDQ6WDQOH\6PLWK%DUQH\ //& PHPEHU 6,3&
taxes (i.e., estate, gift and generation-skipping transfer
taxes) for as long as they remain in the trust. In certain
states, such as South Dakota, the trust may theoretically
last forever. And the plan could be designed so that any
distribution from the Dynasty Trust would be free of gift-
and generation-skipping transfer taxes.
Income or principal from the trust may be distributed to
your children, grandchildren and great grandchildren as
VSHFLÀHG LQ WKH WUXVW GRFXPHQW 7KH SURYLVLRQV FRXOG WLH
those distributions to incentives, such asmaintaining gain-
ful employment, and permit distributions for funding busi-
QHVVHVRU SXUFKDVLQJKRPHV IRU WKHXVHRI EHQHÀFLDULHVRU
other activities. There alsomay be provisions in the trust
document to gift a percentage of the assets directly to a
charity or family foundation. Assets remaining in the trust
are protected from creditors anddivorce judgments.
CreateYour EstatePlan
Discuss your estateplanningobjectives and concernswith
\RXU ÀQDQFLDO DGYLVRU DQG \RXU WD[ DQG OHJDO DGYLVRUV 7R
gether, youcandevelopanestateplan that best addresses
\RXU ÀQDQFLDO DQG IDPLOLDO VLWXDWLRQV
ForMore Information:
AdamE. Carlin is aManagingDirector-WealthManagement, Financial Advisor, andSeniorPortfolio
ManagementDirector atMorganStanley located inCoralGables, FL andmaybe reached at 305-476-3302or
.
