In the past several weeks, I’ve shared some powerful planning strategies with you in hopes of helping you protect and transfer wealth during these tough times.Over the last year, many families have suffered big hits on their stock and real estate portfolios. I can understand why they froze or drastically slowed down their financial dealings. They’re cautious, and rightly so.

However, there is real opportunity amid the crisis. Those falling prices, combined with low, low interest rates, have created an advantageous time for you to transfer wealth to the next generation.

Considering the worsening state of our economy, and the uncertainty that recent bailout efforts by the government will actually work, I believe now is the time to stay focused on your long-term financial goals and to look for new ways to achieve them.

Estate-tax changes are on the horizon. The Federal Estate Tax exemption for 2009 is $3.5 million, and the top estate-tax rate is 45 percent. The tax is scheduled to disappear in 2010 and reappear in 2011 with a $1 million exemption and a top rate of 55 percent.

However, it’s unlikely our now Democrat-led federal government will let that tax disappear entirely. President Obama indicated he favors extending this year’s $3.5 million per-person exemption level and the 45 percent top rate for several years.

With all this in mind, please consider the following strategies I recently suggested in a recent six-part series of articles:

Gifting

You can give away up to $13,000 annually to anyone you want, to as many people as you want, and without tax consequences. You can give away even more by paying for another person’s tuition or medical expenses because these don’t count toward the annual limit. Taking advantage of this strategy can reduce your estate and help your heirs.

Family Loan

If you want to help your child purchase a first home, start a business or take advantage of an investment opportunity, don’t make a direct gift of the cash. Instead, lend the money to your child. The IRS establishes minimum interest rates for these loans, but they are typically far below the rates banks use. You can forgive part of the loan each year through the gift-tax exclusion.

Intentionally Defective Grantor Trust (IDGT)

This strategy is a great idea for anyone who wants to give a beneficiary an asset that is expected to appreciate but wishes to retain its income. Property, stock or a business can be placed into an IDGT.

For example, Mom and Dad create an IDGT into which they wish to transfer $500,000 worth of stock. They can either gift the stock or sell it to the IDGT. If they sell it to the IDGT, they need to convey enough cash into the trust to cover its down payment back to them. They enter into an agreement for a monthly amount and the interest rate on the promissory note equals the Applicable Federal Rate (AFR). The stock will appreciate at a greater rate than the AFR, and so their kids benefit from the appreciation but Mom and Dad’s value is the $500,000 promissory note they traded for the stock.

Grantor Retained Annuity Trust (GRAT)

If you own an asset you expect will increase greatly in value over the coming years, then a well-designed GRAT can help you pass along most of its appreciation to your children tax-free. You begin by placing the asset in a trust that will expire within a specified period — sometimes as little as two years — and then name your children or grandchildren as beneficiaries. You must receive annuity payments from the trust.

If all goes as planned, the asset will appreciate beyond the applicable IRS interest rate, which has continued to fall, and the excess amount passes to your beneficiaries tax-free.

Family Investment Company (FIC)

This is a great strategy to lessen your estate tax burden, increase asset protection, and keep assets in the family. An FIC can be either a Limited Liability Company (LLC) or a Family Limited Partnership (FLP). Parents own units of the FIC and can gift units to children to take advantage of gift tax exemptions.

For example, Mom and Dad own five rental properties. They form an FIC and transfer the properties into it in exchange for 100 percent ownership. They then gift units to children and grandchildren. Mom and Dad keep control of the business and its assets while reducing the size of their taxable estate.

Restrictions in the FIC agreement can limit the transfer of ownership interests and ensure continuous family ownership.

Charitable Lead Annuity Trust (CLAT)

This strategy is a good idea for those who don’t need an asset’s income, have desire to help a charity, but ultimately want to transfer the same asset to their loved ones.

Once the trust funded with an asset, the income is paid to a charity for a period of time. When it expires, the asset transfers to you or your client’s heirs.

For example, Dad put $500,000 worth of stock into a 20-year CLAT that provides $45,000 a year to a charity to pay for scholarships. The stock’s annually earnings increase the value of the trust. After 20 years, the initial principal and any growth will transfer to Dad’s children. Only the remainder interest (what the IRS projects Dad’s trust to be worth at the end of 20 years) is subject to the gift tax.

I hope these strategies help you and your family. If you have any questions, ideas or concerns, please contact me.