Many New York residents are familiar with the phrase, "Nothing is certain but death and taxes." However, the two do not necessarily have to occur together. Those with a large amount of wealth can reduce the amount of estate tax paid upon the death of their spouses through trust administration.

One popular type of trust used is a credit shelter, or bypass trust. This can be set up after the death of one spouse to shelter the amount equivalent to the estate tax exemption amount, currently at $5.25 million per person. The concept of portability allows couples to transfer up to $10.5 million altogether.

A spousal lifetime access trust combines the concepts of an irrevocable trust and a life insurance policy. By funding the trust with the state's tax exemption amount, the cash value remains separate from the estate. It is a good way to stash away money for a spouse or children. The spouse does have the ability to access it during the other spouse's lifetime, which may or may not be a good thing, depending on how stable the marriage is.

In some cases, an estate may be subject to both state and federal taxes. This depends on state law. Not all states impose death or inheritance taxes, so it depends on the person's state of residence. In addition, the tax rates may vary depending on the asset or the person who receives the asset. Closer relatives may be taxed at a lower rate than more distant family members. When trying to understand these complex issues and protect wealth, an experienced attorney can provide valuable guidance and counsel on trusts and other legal mechanisms that operate after a person's death.

Source: Forbes, "Four Ways To Beat State Death Taxes," Ashlea Ebeling, Jan. 28, 2013