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Understanding Advanced Estate Planning Tax Strategies in Chicago

  • Parkview Partners Capital Management
  • Oct 16
  • 3 min read

High-net-worth individuals and families in Chicago often face complex financial challenges where wealth preservation and tax efficiency are just as important as pursuing growth opportunities. Implementing advanced estate planning tax strategies can help mitigate potential tax liabilities—such as estate and gift taxes—and support the smooth transfer of wealth to future generations.


This guide provides an educational overview of several estate planning structures that may be considered as part of a well-rounded financial plan. These concepts are general in nature and should be discussed with professional advisors before implementation.


Why Advanced Estate Planning Matters


For affluent households, estate planning extends far beyond drafting a will. The objective is to structure assets efficiently, align with legacy goals, and reduce potential tax exposure under current laws. The tax code evolves, and proactive planning can make a measurable difference in how wealth transitions from one generation to the next.


Grantor Retained Annuity Trusts (GRATs)


A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust designed to transfer future asset appreciation to beneficiaries with limited gift tax impact. The grantor contributes assets to the trust and receives a fixed annual annuity for a specified number of years.


When the trust term ends, the remaining assets—typically representing appreciation above the IRS Section 7520 rate—may pass to beneficiaries free of additional estate or gift tax.


Implementation Considerations:


  • Asset Selection: GRATs may be suitable for use with assets expected to appreciate significantly, such as closely held stock or concentrated equity positions.

  • Interest Rate Environment: Lower Section 7520 rates can make GRATs more effective.

  • Mortality Risk: The grantor must outlive the trust term for the transfer to succeed; otherwise, the remaining assets may revert to the taxable estate.


Spousal Lifetime Access Trusts (SLATs)


A Spousal Lifetime Access Trust (SLAT) allows one spouse (the donor) to gift assets to an irrevocable trust for the benefit of the other spouse. This approach removes the gifted assets from both spouses’ taxable estates while maintaining indirect access through distributions to the beneficiary spouse.


Implementation Considerations:


  • Separate Property: Assets used to fund a SLAT should be owned individually by the donor spouse.

  • Reciprocal Trust Doctrine: If both spouses create SLATs, terms must differ to avoid IRS reclassification.

  • Life Events: Divorce or the death of the beneficiary spouse may affect access to trust funds.


Irrevocable Life Insurance Trusts (ILITs)


An Irrevocable Life Insurance Trust (ILIT) is designed to own life insurance policies outside the taxable estate. When properly structured, the policy’s death benefit can be excluded from the insured’s gross estate and provide tax-free liquidity to beneficiaries.


Implementation Considerations:


  • Trust Ownership: The ILIT must own and be the beneficiary of the policy from inception. If an existing policy is transferred, a three-year look-back rule applies.

  • Crummey Powers: Including temporary withdrawal rights allows annual contributions to qualify for the gift tax exclusion.

  • Trustee Selection: An independent trustee helps ensure proper administration and avoids estate inclusion risk.


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Charitable Lead Trusts (CLTs)


A Charitable Lead Trust (CLT) allows donors to support charitable causes for a set period while ultimately transferring remaining assets to heirs. The trust makes annual payments to one or more charities, and at the end of the term, any remaining assets pass to designated non-charitable beneficiaries.


Implementation Considerations:


  • Trust Type: CLTs can be structured as either a Grantor or Non-Grantor Trust—each with distinct tax implications.

  • Payment Design: The payout can be a fixed amount (Charitable Lead Annuity Trust, or CLAT) or a variable percentage (Charitable Lead Unitrust, or CLUT).

  • Investment Strategy: Assets should be managed to balance charitable obligations with potential growth for beneficiaries.


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Bringing It All Together: Coordinated Estate Planning


Navigating the complexities of advanced estate planning tax strategies may require the help of experienced professionals to align with personal values. GRATs, SLATs, ILITs, and CLTs are just a few tools available to structure intergenerational wealth effectively.


By working with qualified professionals—including tax advisors, estate attorneys, and fiduciary financial planners—families can design a plan that preserves their legacy and reflects their long-term objectives.



Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor. Stratos Wealth Partners, Ltd. and Parkview Partners Capital Management are separate entities. Neither Stratos nor Parkview Partners Capital Management provides legal or tax advice. Please consult legal or tax professionals for specific information regarding your individual situation. Please consult with your professional advisors before taking any action. Past performance is not a guarantee of future results.


 
 
 

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Financial Advisor, Investment Advisor, High Net Worth, Wealth Management, Tax Planning, Risk Management, Financial Coordination, Retirement Planning, Charitable Giving, Columbus Ohio, Parkview Partners Capital Management

291 East Livingston Ave.
Columbus, OH 43215


Phone: (614) 427-2132

Fax: (614) 427-2132

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