Developing a complete and effective estate plan not only involves preparing a will, but reviewing existing life insurance policies, retirement accounts, and business interests to make sure that each aspect of the estate plan is on track and targeted to achieve the client’s goals.
The importance of a proper estate plan cannot be understated and in order to develop a comprehensive plan, we undertake a complete review of our client’s assets and goals, as well as the various available estate planning tools. By developing a full picture of your circumstances, we also help avoid unexpected surprises for future generations who will carry out the plans. Because of the ever-changing legal and tax environment, it is important not only to put a complete estate plan in place, but to review it periodically.
Traditionally, one of the primary goals in developing an estate plan has been to avoid estate taxes and many planning steps were taken with that aim in mind. However, the role of tax avoidance in estate planning has changed drastically over the years, as the amounts which can pass via lifetime gifts and estate transfers free of estate tax (known as the “unified credit”) has changed significantly, both at the federal level ($675,000 in 2001; $3.5 million in 2009; zero in 2010; $5.45 million as of January 1, 2016) and the state level ($1 million in 2013; slightly more than $2 million as of April 1, 2014; currently $4,187,500; up to $5.25 million by 2019).
As these amounts have increased, and with the introduction of “portability,” which allows spouses to potentially double the amount which can be passed tax free, the tax goals for an estate plan have changed. In many situations, clients are best-served by keeping assets in their taxable estate, to maximize the “basis step up” on many assets held at death, which allows the appreciation in value of assets during a decedent’s lifetime to escape the capital gains tax. In some situations, the changing tax laws may cause provisions of previously prepared wills to have unintended consequences.
For those clients with substantial estates or for whom lifetime estate tax planning is beneficial, we can utilize a wide variety of planning strategies designed to both achieve tax benefits and to ensure that the assets which our clients have worked so hard to accumulate remain properly managed. These strategies can include a strategic annual gifting plan; discounted property transfers, business succession planning and the use of a variety of trust structures including life insurance trusts; qualified personal residence trusts (QPRTs); grantor trusts; and grantor retained annuity trusts (GRATs).
Estate planning is not only important for those who have already accumulated substantial assets; younger families also stand to benefit greatly from early estate planning. While the world of estate planning can be particularly confusing and overwhelming, it is never too early to be prepared. Executing basic estate planning documents (such as a will; power of attorney; and health care proxy) allows clients to address important matters designating a guardian for minor children and memorializing wishes concerning medical treatment and the management of affairs in the event of an injury or illness.
Our estate and trust planning lawyers often work with new parents and other clients who are taking their first steps in planning. This gives us the opportunity not only to guide our clients through these unchartered waters, but to obtain a greater understanding of their goals and develop an ongoing relationship which allows us to help our clients navigate changing life and financial circumstances.
Clients often wish to utilize their assets not only to provide for family and friends, but also to support charitable causes. We have worked with clients to achieve those goals, both during their lifetimes or via their estates, including by forming charitable and tax-exempt foundations and trusts; by negotiating agreements for donations to existing charities; and by the use of charitable remainder trusts.