This week, National Estate Planning Awareness Week, we’d like to take the opportunity to share information with you regarding estate planning. We provide individualized counsel and guidance in the estate planning process. As part of this process, we initially consider and discuss the following big picture, but critically important, issues:

1. Information about your family. This discussion would include any special considerations, such as family make-up (single, married, traditional family, non-traditional family, blended family), possible special needs /disability beneficiary concerns, etc.
2. Your Financial Balance Sheet. This information enables us to determine if, and to the extent, taxes are an issue that needs to be considered, and assists us in considering how assets should be owned and proper beneficiary designations to enable the proper passing of the assets at death. In order to have a properly working and effective estate plan, you need both proper legal documents and the proper ownership of assets and proper beneficiary designations. This information will also show us any assets needing special consideration, such as closely owned businesses, significant IRAs or qualified plan accounts, and enable us to spot liquidity issues, tax issues or other concerns. Finally, this information helps us determine the viable and recommended estate planning document structuring options.
3. Your intent on passing assets at death to loved ones, charitable organizations or both. This is the key driver of any estate plan.
4. Should your property pass outright (simply) or in trust (somewhat more complex but potentially much more beneficial) at your death? While most individuals initially believe they want to keep their plan as simple as possible, the reality is that most of our clients end up preferring the additional benefits obtained by passing assets in trust. Trusts can provide “asset protection” benefits for a surviving spouse, children (descendants) and other loved ones, the ability to help “control” who benefits from your assets, where any remaining assets pass upon a beneficiary’s death, and potential “tax effects” (potentially both pro and con). Based on current tax laws, most of our clients do not choose to use trusts based on the tax effects, but rather choose to use trusts for their non-tax benefits of asset protection and control. These are the common questions asked:

   A. Do you want to significantly increase the odds that any assets remaining at the surviving spouse’s death actually pass to your children (or other loved ones) as desired? This is important because of the possible effect of a surviving spouse’s future marriage, predators during older age or illness, and especially with blended families. If yes, go with trust planning, but if no, go for the simplicity of outright transfers.

   B. Do you care if the assets you pass to your children can be accessed or taken by your child’s potential creditors or a child’s spouse in a divorce situation, or would you rather these assets be protected from unwanted outsiders while the children have full (or lesser desired) access to the assets? If protection is desired, long-term trust planning, or dynasty trust planning (what we sometimes refer to as “GST Planning”) should be used, but if this protection is not important, then the simplicity of short-term trusts for younger children or outright distributions for older children should be used.

   C. If the decision to use trusts is made, who should serve as the Trustee(s), the spouse or the child (normally with an age requirement) who is the primary beneficiary of the trust, another party (person or trust company), or some combination? This is a critically important issue that needs to be carefully considered.

   D. Should the primary estate planning document used be a Will or a Revocable Living Trust? The answer to this question depends on the facts of the particular person’s situation and is not the same answer for everyone in a state like Georgia that has a fairly simple and low hassle probate process.

   E. Do you or your spouse have a higher than normal risk of needing assistance with affairs during life? If yes, a Revocable Living Trust and other additional planning may be needed.

5. Beyond these initial questions, planning needs to consider estate (death) and income tax issues, potential post-death disputes, special needs beneficiaries, special assets, liquidity planning, etc.

So, as you can see, estate planning can go from very simple to quite complex depending on the client’s particular situation and desires. But, we believe it is the client who has the freedom to choose the proper planning for themselves, as it is their life and the lives of their loved ones and favorite charitable causes that will be affected. Our job is to help educate our clients to help them make informed decisions and then to help them best carry out their intent.