Although Kristen and Dave Kelman had worked previously with an estate planning attorney, their existing will was a typical boilerplate document and, as Kristen pointed out, it was pre-kids.

“We were in the process of adoption so it mentioned future kids but it just didn’t go deep enough,” explained Kristen. “The previous attorney asked a lot of questions but didn’t address any of our individual needs.”

That was more than six years ago.

“Now that our lifestyle and handling of money has become more complicated, especially with the boys and the business, we decided it was time to revisit our estate plan,” continued Kristen.

Over the years Dave and Kristen have built their trade show exhibit company from a 2-man reseller business into a healthy enterprise with more than 20 employees who design, manufacture and sell large, custom exhibits. Revenues have grown nicely along the way.

Meanwhile they have completed two international adoptions and are the proud parents of Jason (age 5) and Justin (age 7).

On top of all that, Kristen suffers from a chronic disease – first diagnosed five years ago when it nearly took her life – that requires on-going maintenance medications and a closely-monitored lifestyle.

“I take things more seriously now than I used to, between my health struggles and my children, I feel incredibly responsible to make sure things are in line,” continued Kristen.

Ultimately celebrating Dave’s fortieth birthday served as a reminder that it was time to get serious about protecting their children and their business. They were fortunate enough to be referred to Morgan & DiSalvo by a trusted neighbor and client of Richard Morgan.

Richard worked with them to help identify their goals and made suggestions about the best way to ensure their estate was handled the way they intended.

“First we started with a checklist, asking for family and contact information, questions that will reveal tax and financial issues,” said Richard. “They brought the checklist to our first meeting and we reviewed their situation.”

Together they explored the details of their individual situation, looking at the complicated nature of the business and reviewing how much more would be demanded of an executor who would need to deal with the business.

They asked about what would happen to their boys then mapped out real life situations, coming up with solutions for how they wanted things to happen way in the future.

“Their existing will was pretty generic,” said Richard. “They really needed something that was more flexible and provided greater protection for their kids.”

Dave and Kristen accepted Richard’s recommendation to create a plan that would not only provide for a surviving spouse but would distribute and protect their assets when they were ultimately passed on to their children.

“Many of our clients take this path,” explained Richard. “It has essentially two layers and helps them retain the greatest level of control.”

First Level Estate Planning

The first layer deals with what happens upon the first spouse’s death. Like most people, they wanted their assets to take care of the surviving spouse during his or her life and then have any remaining assets pass along to the children.

Proper estate and tax planning is critical at this point if the estate is going to retain its full value. In general, the estate tax will be based on their net worth plus the combined face amount of their life insurance policies. The objective is to get full value out of both spousal estate tax exemptions. Passing some of the assets outright to the surviving spouse and directing others into a trust helps minimize the tax burden. With the spouse serving as his or her own trustee, the spouse continues to have access to and control over any Trust assets during their lifetime.

“The trusts we craft are legally effective yet practically invisible, providing tax benefits and creditor protection benefits to the spouse and ultimately to their children,” explained Richard.

Second Level Estate Planning

The second layer of their plan outlines what will happen when the assets pass along to their children. Most parents want their assets to eventually pass along to their children, just not all at once. So they first choose a trustee to manage and distribute the funds until the children turn 25 or some other predetermined age of maturity. Based on the terms of the Trust, the trustee either turns over the assets to the child in one lump sum or in age-based installments to prevent them from spending it all at once, providing them the opportunity to learn from their mistakes.

Kristen and Dave took an alternative path that is preferred by many Morgan & DiSalvo clients. Specifically, in lieu of distributing the Trust assets outright to the child in one or more installments, the child is appointed to serve as the Trustee of the child’s own Trust share.

“By making a child the trustee of their share of the trust, we’re giving them practical access to and control over their inheritance with three special benefits,” Richard elaborated.

By keeping their inheritance in trust, the assets are generally protected from the child’s potential future problems, including (1) their creditor claims, (2) their spouses in divorce situations and (3) estate taxation at their deaths.

“Couples come to us wanting a plan that will help them take care of each other and then help them take care of their kids when they are both gone,” explained Richard. “The plan we created for Dave and Kristen takes them to the same place just in a more beneficial way.”

“Working with Morgan & DiSalvo, Dave and I have both learned that you can’t create a plan half way,” explained Kristen. “You have to initiate everything and that is where it is hard. There are so many things that we have to put in place to finish our plan but we have much more of an interest in getting them completed now that we understand their importance.”

More than Just the Legal Documents

At the end, Kristen and Dave received their legal documents – Wills, Powers of Attorney, Healthcare Powers of Attorney, and Living Wills. In addition Morgan & DiSalvo provided them with a letter that gave a big picture overview of their current situation and their plan along with a series of supporting exhibits.

The first supporting exhibit was a financial balance sheet they could use from time to time to keep track of where they were and how their financial position changes over time. It breaks down their assets and their ownership because different assets are handled differently for tax and non-tax purposes.

“The second exhibit was one that I don’t think other attorneys provide,” continued Richard. “It describes how to own their assets and explains how they should set their beneficiary designations for retirement accounts, life insurance, etc.”

The third exhibit was also a distinguishing benefit of working with Morgan & DiSalvo. They provided a summary of the main document – the will – that details in plain spoken English exactly how it is supposed to work.

Clients come to Morgan & DiSalvo because they want a well thought out estate plan that carries out their wishes while minimizing costs and hassles for their heirs. The lawyers at Morgan &DiSalvo take great care in crafting plans that best suit the needs of our clients while ensuring that they understand their options and how their chosen plan works.