How To Use Your Business To Split Income Among Family Members

How To Use Your Business To Split Income Among Family Members

by Bernard Fruchtman, Esq.

With the tax rates running as high as 39.6%, income shifting to family members in lower tax brackets is a valuable tax saving technique.

One technique a business owner can use to shift income to lower tax bracket family members is a sale and leaseback.

Here’s how it works:

Your business sells its equipment to your children and immediately leases it back from them. Your children own the equipment but your business continues to use it. More…

How To Avoid Estate Taxes On Life Insurance

How To Avoid Estate Taxes On Life Insurance

by Bernard Fruchtman, Esq.

Background:

Life insurance proceeds are free of income taxes. In addition, the proceeds go directly to beneficiaries, bypassing probate (the often time consuming process of certifying the will).

However, if you own the life insurance policy at your death, or if you have any ownership rights (explained below) in a policy the proceeds will be included in your estate and will be subject to estate tax.

Advantages of a Life Insurance Trust:


If you set up an irrevocable life insurance trust you get the following benefits:
1. Removal ofthe proceeds from your taxable estate
2. Reduction ofprobate costs (probate fees are often based on a percentage of the value of your estate)
3. Insulation of the insurance policy from your creditors More…