Estate Planning

Only one-third of all Americans have a last will and testament. For the two-thirds who do not, the intestate laws of the states they live in will determine who will receive their assets when they die. Many of our clients are surprised by what those intestate laws say.

Even our clients who have wills may have outdated wills or wills that do something very different than they thought.

What’s more, assets like retirement plans and life insurance pass to heirs based on beneficiary designations and not based on your will. Some people are not sure what their beneficiary designations say and, most of the time, the results that would be achieved by current beneficiary designations are not consistent with a client’s wishes.

When beneficiary designations on retirement plans are structured incorrectly, valuable tax deferral may be lost. Few advisors understand the intricate regulations that apply to the inheritance of retirement assets and the most efficient ways for recipients to make use of the tax deferral rules.

Understanding “Trusts”

Under many circumstances, trusts are an effective way to accomplish multiple estate planning objectives with less cost and trouble than many clients believe.

A trust is really quite simple. Instead of one person holding all ownership rights in an asset, a trust splits the rights of legal ownership and beneficial enjoyment. Under the provisions of a trust, a trustee is technically the owner of the trust’s assets. The trustee must abide by both statutory trustee laws and the written trust document to manage trust assets for the benefit of the beneficiaries. The beneficiaries hold the right to enjoy the benefits of the trust assets subject to the management of the trustee.

The simplest trusts give investment decision-making ability to the trustee and instruct the trustee to pay income and certain amounts of principal to the beneficiaries. In this way, younger beneficiaries and beneficiaries that know little about managing money benefit from the involvement of another person or company better able to make wise decisions regarding investment and tax issues.

Trusts can be used to obtain tax advantages. By shifting the ownership of assets to a trustee rather than an intended beneficiary, trusts can spare your family taxes that would otherwise be paid.

Benefits of Estate Planning

In some cases, a trust is the best way to achieve an estate-planning objective. For example, if a parent leaves money outright to a child, all control over the asset is lost at that point. There is no guarantee that the child will leave that same money to her children. If, however, the parent creates a trust for the benefit of the child and the trust dictates what will happen when the child attains a certain age or dies, the client can feel certain that the maximum benefit of his assets will be enjoyed by more than one generation or more than one member of the family.

We make it a point to see that estate planning is discussed with all of our clients. If you have your own attorney, we will be happy to discuss your estate plan with him or her. If you do not have an attorney, or your attorney is not comfortable with estate planning concepts, we can arrange for you to meet with one of our affiliated attorneys. Our affiliated attorneys may recommend use of powerful strategies, including specialized trust instruments, to create an estate plan with maximum tax relief, maximum flexibility and achievement of all of your estate-planning goals.