Estate and elder law planning involves working within the law to avoid problems, plain and simple. There are many problems to avoid, but where do we focus our attention?
First, estate planners avoid for their clients unnecessary court involvement, and the related costs associated with going through probate and the legal fees related thereto.
Without proper legal papers, during life in the event of incapacity, you can be facing formal legal procedures such as guardianship or conservatorship. These procedures are time consuming and expensive. Once appointed, then the conservator has to report to the court every transaction, usually monthly.
With proper legal papers, you can avoid any assets going through probate. This will save time and money for your family. Fortunately, this one is easy to do.
Second, planners avoid for their clients confusion or lack of clarity as to who gets what assets and under what circumstances. Contingencies and future interests need to be addressed. We do not want there to be any confusion. Who is in control as trustee or attorney in fact is often a touchy issue.
For instance, when a husband and wife are in a second marriage, and they both want to make sure assets will be distributed as they wish, they might be well advised to name a child from each spouse as fiduciaries to act jointly with unanimity.
Third, we try to ensure that transfer taxes are minimized. So, planners look at everything through a lens of minimizing and avoiding any and all taxes.
There are many issues and strategies here, but the law is always changing and vigilance is key. The current administration would like to see the federal estate tax exemption per U.S. citizen to be at $3.5 million per person. This could affect many families and not in a good way.
Without good planning, your estate could owe federal estate taxes.
Fourth, planners advise as to how to implement distributions so they go to loved ones “in trust” so they inherit their share pursuant to the terms of a trust.
You see, if you create a trust for their benefit and leave assets to it, the loved one can be in control of it (they can be the trustee and the initial beneficiary) and they can have full access for their needs but the monies can be protected from (a.) most lawsuits, (b.) protected from equitable distribution division of assets in a divorce, (c.) not subject to estate tax, and (d.) guaranteed to stay in the family, so when your child passes, their share that was left to them in a trust goes to their kids.
If their kids (your grandkids) are under a certain age (30 or 25 or 21), then their share can be held for their benefit in trust for their education and health and maintenance.
You simply have to plan ahead.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com