Estate Planning

We work closely with our clients to listen to their concerns, understand their needs, and craft a customized written plan to efficiently manage and dispose of your property and other assets both during your lifetime and after death, while minimizing taxes and maximizing the transfer of wealth to your loved ones.

Although many people may believe that trusts are only for the wealthy who wish to leave large trust funds to their children or charities, this is not always the case.  Wills and trusts can be valuable tools for typical individuals and families with all levels of income and assets.

Trusts are nothing more than written agreements where one party holds property for the benefit of another party.  In a modern estate plan, one person or married couple creates the estate plan (i.e. the trust) and designates a trustee (who is frequently themselves) to manage the assets for the benefit of their children, other family members, friends or even charities (i.e. the beneficiaries).  The main benefits to establishing an estate plan is to avoid probate (which can be costly, time consuming, and anything but private) and minimizing future estate taxes, if any.  In addition, trusts and estate plans can protect and provide for the education and support needs of minors or other beneficiaries.

There are many types of trusts that can be useful in estate planning but the main ones are as follows:

Revocable living trusts. Revocable living trusts are the most common type of trusts that are frequently set up by a single person or a married couple.  Their main purpose is to avoid state probate (unlike a will which must be administered through the local probate court).  Given recent changes in tax law, revocable living trusts are to a lesser extent used to minimize estate taxes.

Marital trusts.  Because spouses do not generally pass at the same time, a married couple can establish a marital trust to provide for the surviving spouse while ensuring that the deceased spouse’s wishes are carried out.  For example, a husband with grown children from a previous marriage may decide to let his wife use his property after his death but require that it be distributed to his grown children after she passes away.  In this scenario, the husband can achieve the twin goals of providing for his wife first and his children second.

Irrevocable life insurance trusts. An irrevocable life insurance trust (i.e. an ILIT) is an excellent tool to use to shield the proceeds of a life insurance policy from estate taxes.  If one dies owning a life insurance policy, the proceeds of that policy are included in the estate and possibly subject to estate taxes.  By establishing an ILIT, one can exclude those proceeds from potential estate tax and maximize wealth transfer to children or other beneficiaries.  An independent trustee is required to ensure estate tax avoidance. 

Spendthrift trusts.  Typically, a sudden influx of wealth to a beneficiary from inheritance could trigger unwise or excessive spending.  To prevent this, a person can establish a spendthrift trust to protect a beneficiary’s income and/or assets from him or herself or his or her creditors. 

Special needs trusts. Special needs trusts enable a parent to leave assets to an individual with special needs. Many individuals with special needs receive government benefits. If they were to suddenly inherit money, their eligibility for government benefits could be jeopardized.  This could result in them being disqualified from receiving those otherwise valuable benefits.  A special needs trusts can protect their government benefits while also affording them access to supplemental funds for other items they may need.

In addition, there are important other documents that make up a complete estate plan: an advance healthcare directive and a durable power of attorney.  These documents authorize another person to make healthcare and medical decisions for you as well as financial, banking, and property decisions.  With these documents, you can avoid the need to establish as conservatorship.  A trusted decision maker designated ahead of time can be invaluable and save you and your family many thousands of dollars should you experience an unexpected change medically, financially, or both.

With so many different types of trusts, it is important that you speak with an experienced attorney and CPA to find out which is most appropriate and suitable for your specific situation.  Trust can be customized and crafted to achieve your specific goals whether they be gifting, preserving wealth, providing for loved ones, minimizing taxes or all of the above.

Contact Us Now for Assistance With This Important Matter

Please call (818) 344-8200 or use our online contact form to schedule a free consultation.

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