Recent Federal tax legislation lowering estate taxes (and an eventual repeal which many advisors believe will never come to pass) reduces the tax dilution concern for many clients but has not changed the main objective.
Many times we find that clients have not completed "Core" estate documents. A first step is to inventory those and complete any that are necessary but not yet done. In our opinion, the core documents include:
- Wills
- Durable powers-of-attorney
- Medical directives
- Beneficiary designations (life insurance; retirement plans, etc.)
A qualified attorney should be engaged to draft and advise you about the ramifications of the above documents. We can, however, explain their importance and refer you to such an attorney if you prefer to start the core document process, with us.
While estate planning can have many complexities involved, it can be simplified by remembering that it's focus is to get your assets to intended beneficiaries. We call this the clients "Disposition Plan" and are available to assist in preparing a written version of it (for use in drafting the core documents and added planning). Many times we do this in a flow-chart format to facilitate understanding by clients and their attorneys of the flow of assets and control.
Normally, review of the core documents and development of the disposition plan will result in identifying one or more tax/disposition cost reduction strategies to implement. Some of the more common ones, employed by our clients and that we have extensive operating background with are as follows:
- Irrevocable Life Insurance Trusts
- Family Limited Partnerships (or limited liability companies)
- Living Trusts
- Lifetime Gifting Programs
- Valuation "Freezing" techniques
- Utilization of lower income tax brackets of family members
Identifying and implementing strategies to pass wealth on to desired beneficiaries while minimizing taxes and other transfer costs.