WILLS, TRUSTS & ESTATE PLANNING
This title of “Wills, Trusts & Estate Planning” requires a definition. Estate planning incorporates the drawing of wills and trusts, but it is far more than that. Estate planning is all inclusive of drawing instruments, consulting with other professionals such as accountants and specialized financial investment advisors, and most important to determine what are the client’s needs. Examples are helpful.
a. A married couple in their 30’s are enjoying starting their family. She is a wage earner and he is self-employed in his own business. They are concerned about the personal and financial well being of the children should either of them become incapacitated or die. He is thinking about business matters which range all the way from simply meeting the payroll to considering what the business climate will be in the next few years. They have not thought much about basic planning documents as they are simply too busy with their respective employments. Overall, they are very concerned about the family finances - a balancing act between the family budget and the business budget.
b. A married couple in their 50’s are now concerned about their retirement. Although no plans have been made about when this might occur, now they at least can give it some thought because their children have graduated from college which lifts that financial burden. As they think about retirement, their thoughts turn to their grandchildren and foresee that they might well assist them with their future educational needs as such costs keep escalating and not all of their children as parents have equal incomes. As they plan for retirement, they now seriously want to advantage every opportunity for written instruments which not only express what they want but keep an eye upon less taxation on their respective estates. They understand that whatever plans they make now, will surely have to be changed in the next decade.
c. A married couple in their 70’s are financially secure in their retirement. Presently, their health is good but they are aware of special health concerns within their generational families and need to prepare for that. One of their grandchildren has a learning disability which requires special education and they wish to provide for this as much as they are financially able. Doing this, the concerns of the other grandchildren have to be considered because the overall objective is to treat all of the grandchildren equally, or nearly so. While their financial plan is in place, there are continuing concerns about their investments, how these should be addressed and from whom they should be getting advice.
d. The forgoing examples are typical scenarios presented to an estate planning lawyer. It is important for the people represented in each of these examples, and many others, to select an estate planning lawyer who understands the myriad of problems presented by clients. The experienced planner will know, first off, that there is no plan which is “one size fits all.” Just the contrary, each client brings to the table a different set of concerns and values and ideas. Listening and reacting is the core of what an experienced estate planning lawyer provides.
2. The heart of estate planning is counseling to determine needs, and then writing instruments which are appropriate. Any instrument has to be carefully tailored to the client across the table. This law firm understands this and considers each client’s circumstances to be unique which requires utmost concern.
3. Writing instruments puts to proper use sound advice which has been accepted by the client. Examples:
Powers of attorney for business matters. Powers of attorney for health directives. Succession agreements for the family business which may have generational involvement. Charitable gifts, either in the life time of the donor or an after death transfer. Reformation of various business entity documents to more completely address the concerns of the family. Financial planning that is assisted by a different professional with that title, but which needs to be properly incorporated into written instruments which correspond with basic planning documents.
In addition to the broad array of estate planning papers, the will remains a key document. Oftentimes, it is the first planning document prepared, and in some instances it is the only one. Properly drawn, it speaks only to the current situation and we know that it can quickly become out of date as the life of the testator changes - and it is rare that changes do not occur. An experienced lawyer will know that planning alternatives should be incorporated into this Will both as a means to address future concerns as well as to prompt the client to keep thinking about the future.
A trust is an entity which has a long and rich history of how it may so successfully relate to a particular family planning situation. It might be revocable/changeable or it might be irrevocable/not changeable. Most often, a Revocable Family Trust is the first step to acquaint the client with the nature of a trust. While a simply drawn and revocable trust, in many respects, might read like a properly drawn will, the significance difference is the presence of the trustee which has both legal and practical implications. The trust is a living document which, indeed, will outlive the grantor who writes it. There are many variations from the simple revocable trust. Such others as:
a. The irrevocable life insurance trust which includes as its property a life insurance policy, on, generally, the grantor’s life. This Trust recognizes that the true value of its property does not vest until the insured/grantor dies, which means that one of its central features is to be certain that the insurance collected does not burden the taxable estate of the insured.
b. The charitable trust has largely developed from income tax laws which have historically included incentives for individuals to make charitable contributions, and take a deduction against taxable income for that contribution. There are limits and restrictions as to when an income tax deduction is available. These tax angles have promoted different kinds of charitable trusts. Examples: The charitable remainder annuity trust. The charitable remainder unitrust. And other variations. The formation of a charitable trust involves separate issues relating to: gift tax, estate tax, and whether or not the property designated for the trust will be a part of the property included in the donor’s estate. While there are rules to be followed, carefully, a charitable trust remains an integral part of many people’s immediate planning.
c. The total return trust is more a concept, than a separate kind of trust. It is a trust which allows the trustee to adopt total return investing and to allow flexibility to equitably adjust the principle from an investment and the income from an investment between the beneficiaries. Its objective is to yield the maximum return for those beneficiaries. This concept addresses the more usual and long term belief that principal should be preserved and income only be utilized. This kind of trust recognizes the utility of investments and seeks what could be described as a more modern way to advantage the realized benefit to beneficiaries.