Editor’s note: This is part 10 of an ongoing series about using trusts and LLCs in estate planning, asset protection and tax planning. The effectiveness of these powerful tools — especially for asset protection and tax planning — depends very much on how they are configured to work together and whether certain types of control over assets and property are surrendered by the property owner. See below for links to the other articles in the series.
The combined federal and state capital gains tax rates and the lack of a capital gains tax exemption often make the capital gains tax much more costly than the estate taxes for appreciated property. Despite the frequent fact that a trust maker’s beneficiaries might need to pay more in capital gains taxes upon the sale of property than they would need to pay in estate taxes, because the estate tax rate in 2024 is a scary 40%, many estate planners and clients erroneously worry about the estate tax more than capital gains taxes.
