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§ 8.6 ESTATE PLANNING PRINCIPLESNotwithstanding the foregoing, legislation signed into law on June 7, 2001,caused the GST taxes to be reduced between 2002 and 2009, and these taxes areslated to be restored in 2010. 171 The GST tax exemption for a given year (prior torepeal) is equal to the unified credit exemption amount for estate tax purposes.172 Also, as under prior law, the GST tax rate for a given year will be thehighest estate and gift tax rate in effect for that year.§ 8.6 ESTATE PLANNING PRINCIPLESThe term estate planning applies to lifetime financial and tax planning for an individual(and his or her family), as well as planning for the transfer of accumulatedlifetime wealth. Typically, the estate planner focuses on the lifetimefinancial resources, needs, and desires of an individual. At the same time, theestate planner looks at that individual’s needs and desire to provide for othersafter the individual’s death. The estate planner attempts to meet these needs anddesires by utilizing techniques and devices to reduce or eliminate tax consequencesto the individual and his or her estate.There are a number of principles that guide an estate planner in his or herefforts to reduce the federal transfer tax.(a) Estate ReductionThe first principle of estate planning is minimization of the value of the propertyconstituting the decedent’s gross estate. The federal transfer tax ultimatelyreaches only that property remaining in, or by tax law included in, the decedent’sestate. To avoid or minimize tax, one can reduce an estate so that by thetime death (and taxes) arrives, little or nothing remains to be taxed.A number of techniques are available to accomplish this result. The annualgift tax exclusion is one method for removing assets from the estate. An individualcan give up to $11,000 annually to any number of individuals without applicationof the transfer tax. If the donor individual is married, he or she canaggregate the spouse’s annual exclusion and give away $22,000 per year.The annual exclusion can be leveraged to convey assets that will (or can beexpected to) appreciate greatly over time. An annual exclusion amount tax-freegift of appreciating property today may, over time, shelter several times thevalue of the transfer.Likewise, an individual can take advantage of the unified credit to make lifetimetransfers of more than the annual exclusion amount to remove large assetsthat will (or can be expected to) appreciate over time. Assets in amounts up tothe applicable exclusion amount (see above) can be transferred without taxation,and with them any appreciation over the life of the donor.(b) Estate Freezes and Special Valuation RulesA complementary device for controlling appreciation in the estate is throughwhat is known as an estate freeze. Instead of transferring the entire asset that is171 EGTRRA § 501.172 See § 8.4, text accompanied by note 150. 249