A Lifetime Approach to Estate Planning

Concerns:

• Support you have given to charities during your lifetime ends the moment you pass away.
• Loved ones may never fully understand your deep appreciation for the blessings you have received in your life.
• Loved ones never learned to develop a discerning sense as to which charities are in most need and what charitable giving is most effective.
• The opportunity to save significant estate taxes by including charitable giving in your estate plan is missed.
• Loved ones failed to develop key social relationships available to them through work in the non-for-profit world.

Solutions:

• Through the creation of a family foundation and charitable trust, your charitable giving continues to live on long after you pass away.
• Your family can enjoy significant estate tax savings through the use of charitable planning or a charitable trust.
• Loved ones can be members of your foundation board. They can have exposure to significant influential members of the community because of their charitable giving, which may enhance their lives both personally and professionally

Concerns:

• Parent believes that the children have enough assets therefore any further transfer of assets for the benefit of the children will deprive them of the motivation to make their own way in the world.
• Parent’s failure to realize that withholding assets will only result in significant estate tax on the parent’s death.
• Parent does not appreciate that current net worth, while applying a modest, conservative rate of return, will yield an estate tax significantly greater than contemplated with little opportunity at that time, years later, to remedy the situation.

Solutions:

• Create trust vehicles that will be the recipient of assets not only for one, but multiple generations.
• Distributions will be made purely on an as-needed basis for each generational level.
• Children can participate in the investments to enhance future growth inside the trust estate tax free through purchase of companies, private equity, and hedge fund shares.

Concern:

• Despite the transfer of insurance into a trust, if the estate exceeds Federal and State Estate Tax exemption amounts, tax due upon death could result in a significant erosion of estate assets.

Solutions:

• A continued, methodical transfer of assets out of the grantor’s estate into the beneficiary’s estate to allow for the growth of those assets in the beneficiary’s estate.
• Maximizes the transfer of annual gift exclusion amounts to the beneficiary without the requirement to report the gift or pay gift tax.
• Creation of grantor trusts for loved ones to serve as a receptacle of the gifts.
• Use of strategies that allow assets to remain with the family and the “growth” would pass to the children.
• Use of partnership planning where assets are transferred to loved ones, but the control remains with the grantor.
• Family assets may be sold to the children at discounts using a note, which will enable the grantor to continue to enjoy revenue as the children “repay” their loan through cash flow.
• Assets inside a trust would be distributed based on the beneficiary’s needs after considering the other resources the beneficiary has including trusts previously funded for their benefit.

Concerns:

• Life insurance is one of the single largest assets subject to Federal and State estate tax, which historically could exceed 50%.
• The proceeds of life insurance are passing to beneficiaries who are too young, resulting in assets subject to attack by third parties (spouses, creditors, etc.)
• The estate requires liquidity to pay estate tax, which may result in the sale of other estate assets (such as a primary residence).

Solutions:

• Creation of trusts to hold strictly life insurance policies to avoid Federal and State estate tax upon the death of both spouses.
• Flexibility in the event of a change of circumstances, possibly the death of a spouse or other fiduciaries.
• Allows for the transfer of life insurance proceeds in the most tax efficient manner for gift and generation skipping tax.
• Enables the trust to hold an unlimited amount of life insurance proceeds if the family requires larger life insurance policies.
• Allows for removal of trustees due to a change in strategy or circumstances.

Concerns:

• Assets do not pass to your surviving spouse.
• Representatives are not named to administer your estate and your estate is tied up in probate.
• Children receive assets without direction, guidance, and protection against creditors and plaintiff attorneys.
• You become disabled and your representatives do not have the legal right to act on your behalf.
• You have a serious medical condition and the medical authorities impose their own agenda.
• Your medical records are not accessible for your representatives to obtain a second opinion for you to receive alternate treatment.
• Your children are not treated in a medical facility because both parents are not available and their condition is not life threatening.

Solutions:

• Last wills and testaments name spouse, children, and other beneficiaries to receive estate assets in protective trusts as well as fiduciaries to administer the estate.
• Health Care Proxy and Durable General Power of Attorney list named individuals to make medical and financial decisions in the event of incapacity.
• Living Will describes what kind of health care you wish to receive in the event that you are incapacitated.
• An Authorization for Release of Protected Medical Information gives trusted family and friends the authority to access your protected medical records.
• Health care documents are created for minor children, naming trusted individuals to assist in medical decision making if both parents are unavailable.