Estate
planning is the process whereby we work with our clients
to make sure that their ultimate desires with regard to
their estate will be carried out after death. A successful
estate plan starts with a clear understanding of the client's
goals and the client's current and projected financial circumstances.
A well drafted estate plan clearly establishes who will
take what, when and under what conditions and, while taxes
should never dictate an estate plan, the tax consequences
are always carefully considered and minimized to the greatest
extent possible.
Wills
A Will is a legal document which helps you to put your
affairs in order at the time of your death; it allows
you to express your intentions regarding your estate (your
home, money and other assets). Your Will identifies who
will handle your estate (your "executor"), to
whom your assets will be distributed (your "beneficiaries")
and who will serve as guardian of your minor children.
If you have a potential beneficiary who has special needs
(such as a disabled child), your Will can contain instructions
to your executor to make sure such a beneficiary is taken
care of according to your wishes. If you die without a
Will, your estate will be distributed according to a formula
established by state law. Your spouse may have to share
your estate with other family members. A court may name
a guardian of your minor children whom you would not have
approved of. The state's formula does not take the special
needs of any beneficiary into account.
Wills can be simple or complex; they will differ for
single individuals and married couples, for people with
minor children and for people with no children, for people
who have a taxable estate and those who do not have a
taxable estate. A variety of techniques are available
for use in a Will to minimize or eliminate estate taxes.
Powers
of Attorney
An important part of estate planning is the recognition
of the possibility of incapacity and to plan for substitute
decision making. A durable Power of Attorney is an instrument
in which you designate an Agent to act on your behalf
should you become incapacitated. Without a Power of Attorney
it would be necessary for your family to initiate Guardianship
proceedings in order to obtain the legal authority to
take care of your financial affairs and to make health
care decisions on your behalf. For long term care/nursing
home planning, it is critical that your power of attorney
provide for unlimited gifting as well as the power to
change ownership and beneficiary designations on such
things as life insurance, IRAs, and annuities.
Living Wills
A Living Will is a document in which you state your wishes
regarding life sustaining medical treatment under circumstances
where you are terminally ill with no hope for recovery
and are mentally incapacitated so that you cannot make
decisions for yourself. It is similar to a durable healthcare
Power of Attorney but only takes effect under limited
circumstances.
Trusts
Trusts can be created within a Will or as a free-standing
entity in order to accomplish a number of objectives,
such as the transfer of ownership of property while maintaining
a measure of control over the property; Tax savings; Protection
for a disabled loved one; to avoid financial Guardianship
proceedings; and Protection from creditors.
Living
Trusts
A Living Trust is a revocable trust (meaning that you
can terminate or change it at any time) which allows you
to manage your affairs until you become incapacitated,
at which time a Trustee named by you in the trust document
has the legal authority to manage your affairs. A Living
Trust also contains provisions similar to those in a Will
which designate how your estate is to be handled after
you die. There are many reasons for planning your estate
using a Living Trust instead of a Will and durable Powers
of Attorney, the most common being to avoid probate.
Special
Needs Trusts and Supplemental Needs Trusts
Planning for disabled individuals involves a number of
complex issues where trusts can be helpful. For most disabled
individuals, maintaining eligibility for Medicaid is very
important. A Special Needs Trust can be used to hold a
disabled individuals own assets while allowing them to
maintain eligibility for Medicaid. A Supplemental Needs
Trust can be used where the disabled individual is likely
to inherit money that would otherwise make them ineligible
for Medicaid.
Charitable
Giving
There are many benefits to charitable giving, these include
tax deductions such as income tax deductions, inheritance
tax deductions and federal estate tax deductions. The
tools we use vary in their size and scope. Essentially
there are three categories; the Charitable Remainder Trust,
the Charitable Lead Trust, and the Private Family Foundation.
The Charitable Remainder Trust allows you to gift highly
appreciated assets to the trust while retaining an income
interest for your life or the life of you and your spouse.
When you or the survivor of you passes away, the remainder
interest in the trust passes to the charity. In addition
to the death tax deductions, you also receive an income
tax deduction for the present value of the gifted remainder
interest.
The Charitable Lead Trust is the opposite. With the Charitable
Lead Trust, the income interest is given to the charity
on a monthly, quarterly or annual basis. When you die,
the remainder interest goes to your heirs. The value and
amount of the deductions is based upon the terms of the
trust.
A private family foundation is a charitable corporation
or trust that you set up today. This foundation is a charitable,
non-profit corporation and you receive an income tax deduction
for the gifts you make to the foundation. There are limitations
to how much you may deduct and the value of the deduction.
However, the benefits are numerous.
Questions? Call
(412) 751-5670
