While researching ways in which you could use estate litigation to minimize your estate and gift taxes, you might have stumble across what are known as estate freeze trusts. These types of trusts can be very useful for avoiding taxation while benefiting by trust income from dividends. Using an estate freeze trust is a very good way to avoid paying capital gains taxes.

Say you are planning on holding an asset such a stock in a company for a long period of time. You realize that stock will be substantially more valuable in the future than it is now and your heirs will have to pay a lot in capital gains taxes. Avoiding that can be achieved by exchanging common stocks for preferred stocks. By holding these stocks in the estate freeze trust the trust can still benefit from the dividends, but not incurr any of those capital gains taxes.

Setting up this kind of trust is complicated, so it really is wise to consult with a professional estate litigation Attorney when considering this method.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.