Estate planning can have many facets depending on your family and health concerns, assets and taxes.
Basic estate planning should include a last will and testament to spell out who gets what and:
Power of Attorney
A durable power of attorney which names an agent who can act in your place, for all or some of your personal financial affairs. It is an invaluable part of planning that:
- Survives mental incapacity so that an agent can act per your wishes even if you are no longer able to do so.
- Enables you to delegate all or only some authority to an agent.
- May avoid the need for a guardianship or conservatorship proceeding in the event you become mentally impaired.
Healthcare directives which designate an agent to:
- Insure your agents carries out your wishes if you are unable to make healthcare decisions.
- Carry out your decisions regarding end of life care.
Trusts are separate legal entities that are created for unique purposes. The trust becomes the legal owner of property transferred to it, and a trustee has the fiduciary responsibility to hold and manage the trust property as spelled out in the trust agreement. In certain types of trusts, the person who creates the trust, can be the trustee for beneficiaries. In other types of trusts, the person who creates the trust is not the trustee and instead a third party is appointed – often for tax reasons.
Following are examples of types of trusts commonly used in estate planning:
- A Living trust is created to own assets to avoid the probate process.
- A Medicaid or asset protection trust is designed to preserve assets and qualify for Medicaid.
- A Qualified personal residence trust enables you to transfer your primary residence or a vacation home out of your estate, for tax purposes.
- An Inter-Vivos trust is a trust you create while you are alive and may provide for your children.
- An Irrevocable life insurance trust is created to own life insurance so it is not subject to estate tax.
- A DEffective grantor retained interest trust is created to pass property or a family business to the next generation.
There are a variety of trusts that can be established and we spend the time to plan one that works best for you.
Advanced estate planning
Most clients are concerned with basic estate planning to make sure their assets pass per their wishes. For Individuals or families with wealth in excess of roughly $5.5 million, estate planning often requires more planning. Special planning is needed for certain types of assets such as a family business , substantial pension/IRA benefits and state estate tax.
Those with taxable estates (in excess of the $5.49 million in 2017) may require more tax planning to minimize the size of a taxable estate. This may include:
- Dividing assets among family members through a family limited partnership, defective grantor trust, or other tax advantaged planning vehicle.
- Establishing to reduce the taxable estate.
- Use of Qualified Personal Residence Trusts (QPRT) to pass a home to your children and have it out of your taxable estate.
For owners of a closely-held business, planning is required to:
- Value the business.
- Draft an agreement to sell the business to a partner.
- Pass ownership to the next generation who may or may not work in the business.
You may have other special concerns which must be addressed in your estate plan. These include:
- Special Needs Trust for a relative receiving benefits on account of a health condition or disability.
- Significant IRA/Pension/401(k) assets which you want to leave to a spouse or children.
- Collections of art or other valuables which must be appraised and preserved.
Want to know more? please call Susan G. Parker esq. PC at (914) 923 – 1600 with any questions or concerns.