Estate planning: Preparing for the transfer of a person's assets after death as desired.

Estate Planning, Wills, and Trusts

As you read through the information on this page you may come to realize just how complex and how necessary the process of Estate Planning is.

A well-designed Estate Plan may be extremely time consuming, and then it must be maintained to keep up with changes not only in the law but also within your life and other situations.

We do all of this for our clients at no additional charge. It is just one more part of our commitment to help our clients in any way possible.

How does it all work?

Assets can be simply defined as everything you own. This includes life insurance cash values, (and face amount after death), real estate, savings, and everything else.

Estate Plans must be written, signed, and notarized by the person who owns the estate.

Although Estate Planning is very specific in structure, designing a proper Estate Plan is a creative process that encompasses imagining what possible situations my occur after the decedent’s death and trying to create systems to defend the family’s assets against unwanted outcomes. This creative process takes many hours to develop, and in our experience, most Estate Plans never benefit from such a detailed creative process.

Some examples of matters that must be taken into consideration are: 

  • What if one of your heirs marries someone less than desirable and then, when they inevitably breakup, this stranger ends up with half of your life savings?

  • What about children with special needs?

  • What if some of your heirs are minors?

  • What if some of your heirs are considered by you to not have the capacity to manage such large amounts of assets successfully?

  • What about charitable organizations you may want to support, and how can you create a legacy rather than just a lump sum gift?

  • What if some of your heirs have children from a spouse’s previous marriage?

  • You’ve worked very hard all your life to accumulate assets for your benefit, and after your death for the benefit of your heirs, but are they ready to receive those assets?

  • At what age should heirs get the estate? 

  • Would you prefer to create a living estate that can provide your family with a financial legacy for the rest of their lives, and their children and grandchildren’s lives?

    It all seems very complex, and it can be. However, estate planning is simply the process of visualizing the future unveil after you pass away, and your assets being distributed according to your wishes.

Estate planning is for everybody, not just the wealthy. Without an appropriate estate plan, relatives and other interested parties can spend considerable time and potentially a small to large portion of your assets battling over your assets. Estate Planning is a necessary step in ensuring that your assets end up where you want them, without the interference of the IRS or third parties.

Wills are simply legal documents that express the decedent's intentions for burial and to whom he or she wishes to pass money and property (the estate) when he or she dies. A judge has to allow the transfer of that money and property from the decedent's accounts to the beneficiaries' accounts. This procedure is known as probate, and it opens the door for relatives or third parties to contest your will and for a judge to potentially misinterpret your wishes, both of which can tie up an estate in court for lengthy periods of time.

Furthermore, probate fees may cost thousands and thousands of dollars. There may be executor fees, court fees, recording fees and attorney fees, and in many cases these fees must be paid as the estate is probated, meaning that the heirs will need to come up with the money in a short period of time upon the person's death. A will also does not alleviate the potential liability of estate taxes.

For most people a simple will won’t do the job. But a will is always necessary as a part of a broader Estate Plan.

Besides a will, a properly designed Estate Plan will also benefit from: 


Health Care directives.

Writing out your wishes for health care can protect you if you become unable to make medical decisions for yourself. Health care directives include a health care declaration ("living will") and a power of attorney for health care (A Health Care Proxy), which gives someone you choose the power to make decisions if you can't. (In some states, these documents are combined into one, called an Advanced Health Care Directive.)


Financial power of attorney.

With a durable power of attorney for finances, you can give a trusted person authority to handle your finances and property if you become incapacitated and unable to handle your own affairs. The person you name to handle your finances is called your agent or attorney-in-fact (but doesn't have to be an attorney) in fact in most cases it is a trusted member of your family.


Children and property.

You should name an adult to manage any money and property your minor children may inherit from you. This can be the same person as the personal guardian you name in your will.


File beneficiary forms.

Naming a beneficiary for bank accounts and retirement plans makes the account automatically "payable on death" to your beneficiary and allows the funds to skip the probate process. Likewise, in almost all states, you can register your stocks, bonds, or brokerage accounts to transfer to your beneficiary upon your death.


Consider life insurance.

If you have young children or own a house, or you may owe significant debts or estate tax when you die, life insurance may be a good idea.


Understand estate taxes.

Most estates -- more than 99.7% -- won't owe federal estate taxes. For deaths in 2020, the federal government will impose estate tax at your death only if your taxable estate is worth more than $11.8 million for a single person (up slightly from the 2019 threshold of $11.4 million).  This exemption amount rises each year to adjust for inflation. Also, married couples can transfer up to twice the exempt amount tax-free, ($23.6 million) and all assets left to a spouse (as long as the spouse is a U.S. citizen) or tax-exempt charities are exempt from the tax. IRS Form 706.

This increase in the exemption is due to "sunset" as of January 1, 2026, meaning that estate, gift, and generation-skipping transfer tax exemptions will return to their pre-2018 levels. While it is possible that Congress could vote to extend them, conservatively we feel that it should be assumed at this time that the increased exemptions will go back to their previous levels and there is always the possibility of a complete overhaul of the Estate Tax law, given the current negative sentiment toward people of wealth and the big push for wealth redistribution.  

That means that while the increased exemptions are in place, there are some interesting opportunities and challenges for those interested in updating their estate plan and gifting to loved ones.

State Tax however is another matter and of course Estate Tax laws and exemption amounts change often, requiring your estate plan to be revisited, and if necessary, changed.  The most recent tax reform did not repeal the estate tax for those states that assess one. If you live in one of the following states, your assets will still be subject to the appropriate level of any state-imposed estate tax:

District of Columbia
New York
Rhode Island

Additionally, six states levy an inheritance tax, separate from the estate tax. These states are Nebraska, Iowa, Kentucky, Pennsylvania, Maryland and New Jersey. Maryland is the only state in the country that levies both an estate tax and an inheritance tax. The key difference between an inheritance tax and an estate tax is who’s responsible for paying. With an estate tax, the estate is responsible, but with an inheritance tax, the beneficiary is responsible. Spouses are exempt from paying the inheritance tax in all six of these states, and some states extend that exemption, at least partially, to all immediate relatives.


Cover funeral expenses.

You can use a funeral prepayment plan or you can set up a payable-on-death account at your bank and deposit funds into it to pay for your funeral and related expenses. Funeral homes want to be paid in advance and your heirs will have to liquidate their personal assets to pay for your funeral needs long before they receive any money from your estate.


Make final arrangements.

Make your end-of-life wishes known regarding organ and body donation and disposition of your body -- burial or cremation. Also consider listing who would receive special sentimental items of a personal nature, such as mom's engagement ring,


Protect your business.

If you're the sole owner of a business, you should have a succession plan. If you own a business with others, it may be advisable to have a buyout agreement.


Store your documents.

Your attorney-in-fact and/or your executor (the person you choose in your will to administer your property after you die) may need access to the following documents:

• will
• trusts
• insurance policies
• real estate deeds
• certificates for stocks, bonds, annuities
• information on bank accounts, mutual funds, and safe deposit boxes
• information on retirement plans, 401(k) accounts, or IRAs
• information on debts: credit cards, mortgages and loans, utilities, and unpaid taxes
• information on funeral prepayment plans, and any final arrangements instructions you have made.

Keeping your documents organized will be a great help to your beneficiaries. We can keep available copies of all your documents to make things easier.


Create a bridge.

We also help create a bridge between you and your heirs and executors so that long before you pass they know us, they know of our very personal relationship with you and they can rely on our advice to help them navigate the settlement of your estate. This can be instrumental in making sure costly mistakes are not made and remove much of the stress imposed on your spouse and other loved ones.

Consider a trust

A trust may be used as an estate planning tool, to direct the distribution of assets after the person who creates the trust passes away. Trusts may be used to provide for the distribution of funds for the benefit of minor children or developmentally disabled children. For example, a spendthrift trust may be used to prevent wasteful spending by a spendthrift child, or a special needs trust may be used for developmentally disabled children or adults. Trusts offer a high degree of control over management and disposition of assets. Furthermore, certain types of trust provisions can provide for the management of wealth for several generations past the settlor. Typically referred to as dynasty planning, these types of trust provisions allow for the protection of wealth for several generations after a person's death.

Basic types of trusts

(click on each for more information.)

Designed to provide benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse.

Also known as a credit shelter trust, which is established to bypass the surviving spouse's estate in order to make full use of any federal estate tax exemption for each spouse.

Outlined in a will and created through the will after the death, with funds subject to probate and transfer taxes; often continues to be subject to probate court supervision thereafter.

Irrevocable trust designed to exclude life insurance proceeds from the deceased’s taxable estate while providing liquidity to the estate and/or the trusts' beneficiaries.

Allows certain benefits to go to a charity and the remainder to your beneficiaries.

Allows you to receive an income stream for a defined period of time and stipulate that any remainder go to a charity.

Using the generation-skipping tax exemption, permits trust assets to be distributed to grandchildren or later generations without incurring either a generation-skipping tax or estate taxes on the subsequent death of your children.

Used to provide income for a surviving spouse. Upon the spouse’s death, the assets then go to additional beneficiaries named by the deceased. Often used in second marriage situations, as well as to maximize estate and generation-skipping tax or estate tax planning flexibility.

Irrevocable trust funded by gifts by its grantor; designed to shift future appreciation on quickly appreciating assets to the next generation during the grantor's lifetime.

Revocable vs. irrevocable

There are many types of trusts; a major distinction between them is whether they are revocable or irrevocable.

Revocable trust: Also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor's) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor. You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms, assets during your lifetime, and make provisions for a successor trustee to manage them in the event of your incapacity or death. Although a revocable trust may help avoid probate, it may still subject to estate taxes. It also means that during your lifetime, it is treated like any other asset you own.

Irrevocable trust: An irrevocable trust typically transfers your assets out of your (the grantor's) estate and potentially out of the reach of estate taxes and probate, but cannot be altered by the grantor after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust. An irrevocable trust is generally preferred over a revocable trust if your primary aim is to reduce the amount subject to estate taxes by effectively removing the trust assets from your estate. Also, since the assets have been transferred to the trust, you are relieved of the tax liability on the income generated by the trust assets (although distributions will typically have income tax consequences). It may also have protection in the event of a legal judgment against you. 

Which trust best fits your situation depends on the size and nature of your estate and your willingness to give up control of your assets during your lifetime. 

The Process

There is more, much more to the process of Estate Planning. We start with a simple fact find, then we embark on a series of creative meetings where we consider what potential pitfalls may exist within your particular situation and create a plan specifically tailored for you and your needs.

We spend the nessesary time to make sure you understand all the intricasies of your plan and are satisfied that it can create your desired outcomes as best as possible.

Then we actually provide examples of all the needed documents and provide you with them. From there you are free to have your attorney review them and make any nessesary changes before implementation.

We do the heavy lifting of creative design, saving you time and potentially some money in the process. 

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