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Good planning, whether the situation is simple or more complex, preserves family harmony, protects assets, eases administrative hassles, and can reduce taxes, fees, and costs. Many individuals feel that they do not have an “estate” to plan. However, that is more often than not incorrect. Virtually all individuals and families need an estate plan, although some people have a heightened need for planning, particularly those with a higher net worth, in a high-risk profession, who own a business, who live in a blended family, who have loved ones with special needs, who have minor children, or who have a significant charitable intent.
Our firm believes that this type of planning should be comprehensive, taking into account every aspect of the client’s life. We have experience in not only drafting basic estate planning documents, such as a will or trust, but also in asset protection, business succession, planning for individuals with special needs, and preparing for long term care and Medicaid. Planning ahead is crucial in keeping things simple for your loved ones after death.
A carefully guided and effective estate plan, as set forth through testamentary documents, can secure your legacy and save your family a great deal of difficulty beyond your passing. Our attorneys have the knowledge and experience to craft an individual plan for you and your family.
If you have an existing plan, it should be reviewed and updated every three years, or in the event of any of the following:
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Change in marital status;
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Birth of child;
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Change in state of residence;
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Significant change in the value or character of your assets;
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Change in intended beneficiaries;
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Death of a beneficiary;
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Death of a guardian, trustee, or personal representative named in your will; or
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A change in the tax laws affecting federal estate tax deductions and calculations.
Estate Planning is important, no matter what the size of your estate may be. Through estate planning, you ensure that your assets will go to your intended beneficiaries. You also may save money on taxes, court costs and attorneys fees, and prevent squabbling among your heirs and financial confusion after your death. You can also avoid probate. In addition, you can protect your estate assets against your possible future mental or physical incapacity and the catastrophic costs of long-term medical and nursing care.
One of the best ways to help assure that your assets will be managed for your family as you intend is to develop a comprehensive estate plan designed to meet your individual needs. The estate planning process typically involves working with your financial, tax and legal advisors to develop a customized estate plan. Many estate plans include the following:
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Last Wills and Testaments
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Durable Financial Powers of Attorney
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Advance Medical Directives
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Revocable and/or Irrevocable Trusts
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Insurance Trusts
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Charitable Remainder Trusts
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Minor's Trusts - Spendthrift Trusts
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By-Pass or Credit Shelter Trusts
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Marital Trusts (QTIP)
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Grantor Retained Annuity Trusts or Grantor Retained Uni-Trusts
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Qualified Personal Residence Trusts
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Planning for Disabled Children
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Life and Long-term Care Insurance
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Gifting Strategies
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Business Succession Planning
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Family Limited Partnerships
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Pre-Nuptial Agreements
Providing for Incapacity
Most people wrongfully assume that a Will can provide for their family if they become incapacitated, or that their spouse or adult child(ren) can automatically make medical and financial decisions if they were unable to speak on their own behalf. However, neither is true. A Will does not become effective until a person dies and both a spouse and adult child(ren) would have to petition a court, which can be can be lengthy, costly and stressful, to declare you “legally incompetent” before gaining the right to handle your medical or financial affairs. Battling a court to unfreeze essential funds or to gain the right to make important quality of life and medical decisions on your behalf is the last thing any family wants, or needs, in a time of tragedy.
Fortunately, by setting up powers of attorney, specifically the Durable Financial Power of Attorney and the Durable Medical Power of Attorney, and a Living Will (also known as an Advanced Health Care Directive), you can easily appoint someone you trust to handle your affairs and immediately make decisions regarding the medical care you would want (or not want) if you were to become incapacitated.
Avoiding Probate
Probate can be avoided as to those assets placed in a living trust. Probate administration often involves additional expense, delays in distribution, continuing supervision of testamentary trusts by the probate court and publicity regarding the client, his family and his assets. Ancillary probate proceedings as to the client's property located in a state other than the state of his domicile at his death also can be avoided by the use of a living trust.
Providing for Minor Children
If you have minor children, then probably the most important decision you will have to make with regard to your estate plan is who should take care of your children if you die while they are still minors. In addition, many parents worry about the financial support of their minor children upon their death.
Fortunately, these questions can be resolved with estate planning, as parents can name guardians for their kids, and set up specific legal documentation to ensure their children are protected -physically, financially, emotionally and spiritually in a way they want, by the people they want, when they are gone.
Planning for Death Taxes
The drafting and the administration of trusts has been made increasingly complex in recent years by reason of the development of a large body of federal and state law relating to the taxation of trusts and their beneficiaries. The potential tax liabilities under various trust arrangements must be considered when drafting your estate plan and our highly experienced attorneys can help you make those difficult decisions.
For a number of reasons federal income, estate and gift taxes have been assumed to be of greater importance in planning with trusts than state and local taxes. The federal tax rates are generally higher than the comparable state tax rates and the federal law is more detailed and inclusive in its coverage. Many of the state tax laws, particularly the inheritance and estate tax laws, are directly or indirectly integrated with the federal tax laws, and most state tax laws use many of the same rules and terms. However, the effects of state income, inheritance, estate and gift taxes and local property taxes must not be overlooked and no estate plan with trusts should be considered without taking them into account. Certain fundamental decisions regarding an estate plan, such as where a trust is to be located, the choice of a trustee, or whether a power of appointment over trust property should be created or exercised, may be made on the basis of the possible applicability of state taxes.
Charitable Bequests – Planned Giving
Proper estate planning will allow you to provide for the charitable organization or cause of your choice during your lifetime or after your death. You can also set up your giving plan in such a way to draw a stream of income for life, earn a higher investment yield or receive a reduction of your capital gains/ estate taxes.
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays. You should consult a qualified estate planning attorney to review your family and financial situation.
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