Estate Planning can mean different things to different people. The common idea that “having an estate plan” meant that an individual had in place a valid Last Will and Testament is no longer the norm. Of course, every person should at least have in place a Last Will and Testament, a General Durable Power of Attorney and a Living Will/Advanced Health Care Directive. Depending on where you live, a Revocable or Living Trust may also be a significant part of your estate plan. But is this really a “plan”? What history has shown us over the last three decades is that legislation changes. A good estate plan will attempt to accommodate, to the extent possible, the roller-coaster ride of tax law changes while first and foremost planning for your needs while living, and meeting your wishes for the disposition and protection of your assets for your loved ones upon your death.
Death and taxes are two pieces of reality that most people feel uncomfortable thinking about, let alone talking about or planning for. And that is understandable. However, death and taxes are a reality. A good estate plan does not just plan for death and taxes. A good estate plan is a holistic plan that ensures your estate planning documents, your beneficiary designations and your asset titling all work together to i) meet your planning needs while you are living; ii) meet your wishes for the distribution and protection of your assets for your loved ones when you are gone; iii) accommodate your wishes for any charitable planning; and iv) minimize any estate or other transfer taxes in the process. If the individual’s assets include ownership in a closely-held business, the individual’s estate plan should also include business succession planning. An individual’s estate plan may also consist of planning for a life partner after the individual passes away, or planning for a beneficiary with special needs.
Depending on a client or family’s net worth, some advanced estate planning vehicles or techniques may need to be utilized to meet the client’s objectives and minimize gift, estate and generation-skipping transfer taxes. These may include charitable planning through the use of private foundations, donor-advised funds or charitable trust planning; life insurance planning through the use of irrevocable life insurance trusts; irrevocable gifting or “Crummey” trusts; qualified personal residence trusts; grantor-retained annuity or unitrusts; or family limited partnerships or limited liability companies, to name just a few available alternatives.