Reducing taxes is an integral part of the estate planning and asset protection process. The following are some examples:

• Operating a business in an entity treated as a C or S corporation can have adverse income tax consequences if the corporation redeems a deceased shareholder's shares.  Redemptions are sometimes used to shift ownership on the death of an older generation to one or more members of the next generation while equalizing the value the inheritance of among all the members of the next generation.
• Assuming that we will have a continuation of the federal estate tax, gift tax and generation tax after 2009, basic federal estate planning will continue to take advantage of the exclusions and exemptions from those taxes toward the end of sheltering estates from those taxes.
• An irrevocable trust is taxed at the highest federal income tax rate of 35% if undistributed taxable income exceeds $10,700.  The tax rates are so compressed that the average tax rate below $10,700 is almost 26%. In drafting trusts, strategies should be considered that will reduce the income tax burden.