Estate & Legacy Planning

Although congressional action has effectively eliminated federal estate and gift taxes for all but the wealthiest Americans, there is still a vital need to do estate planning.

Why? There are several key reasons: (1) to be sure that all of your wishes are followed after death; (2) to plan for state inheritance or estate taxes, if you live (or own property) in a state which levies such a tax; and (3) to plan in advance how to pay for any estate settlement costs. Federal estate tax law may have changed, but estate planning still matters.

At a person’s demise there are certain typical problems which, if not planned for, create a burden on those who are left behind. Proper estate planning can eliminate or reduce these problems.

Financial Burdens

• Estate settlement costs are too high: These costs consist primarily of probate fees and death taxes.
• Probate fees: These are generally paid to the executor of the estate and the attorney who assists with the probate.
• Death taxes: Estates that exceed certain amounts may be subject to both state and federal death taxes.
• Estate assets are improperly arranged:
• Liquidity: There are not enough liquid (cash type) assets to pay estate settlement costs.
• Cash flow: There is not enough income to care for loved ones left behind, e.g., spouse and minor children

Transfer of Assets

• Estate assets may be subject to probate delays and expense
• Assets transferred to minors may be in cumbersome guardianship accounts until they attain age 18 (or 21 in some states) and are then distributed outright to the children. A court supervised guardianship may be required.
• Additional death taxes may be paid because there was no pre-death planning.
• Without planning, estate assets may not pass to the intended heirs.

Care of Minors

• Guardians: Parents can nominate a guardian for their minor children in a will
• Asset management: If the wrong persons are chosen to manage the assets left for the minors, the assets may be lost or unnecessarily reduced.