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Estate Planning

Why Plan Your Estate?

The knowledge that we will eventually die is one of the things that seems to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your demise until it is too late, you run the risk that your intended beneficiaries -- those you love the most -- may not receive what you would want them to receive whether due to extra administration costs, unnecessary taxes or squabbling among your heirs.

This is why estate planning is so important, no matter how small your estate may be. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

Types of Trusts

Revocable Trust- A revocable trust is an estate planning tool most often touted as a means of managing assets in the event of incapacity, avoiding probate, maximizing available estate tax exemptions, and managing assets for the benefit of heirs. A revocable trust can be viewed as an extension of one’s self or as a small business wholly owned by an individual or couple. As the name implies, this type of trust is fully revocable and thus can be altered, amended, or otherwise disbanded by the Grantor/Settlor (owner) at any time.

A revocable trust can be funded with the assets of a single individual, or the joint assets of a husband and wife and can be utilized to manage many types of property including real property, vehicles, bank accounts, investment accounts, mineral and timber rights, and many more.

There are three important terms with which one contemplating the use of a trust should be familiar. The term “Grantor” or “Settlor” is used to describe the creator of a trust. The “Trustee” is charged with managing the property held in the trust. A “Beneficiary” receives the benefits of the assets held in trust.

In a typical revocable trust scenario, an individual or a husband and wife are nominated as the initial trustee(s) and beneficiary(s). A family member, surviving spouse, or corporate trustee (bank) often serves as successor trustee for the benefit of heirs and other beneficiaries. A trust can be terminated upon the death of a named party or parties, or other stated event.

It is important to note that trusts are very flexible estate planning tools, the terms of which are often only limited by the creator’s own imagination. If you or a loved one are contemplating the use of a trust based estate plan, please feel free to contact us for additional information so that you might determine if a trust is right for your planning needs.


Irrevocable Trust- Irrevocable Trusts are most often utilized to achieve specific tax related and asset protection objectives. Just as the name suggest, irrevocable trusts are generally a much more “permanent” type of estate planning too. Transfers of assets to irrevocable trusts are generally considered completed gifts for gift and estate tax purposes and thus the assets are no longer said to belong to the transferor. This fact may provide a level of asset protection for assets transferred to an irrevocable trust. Termination or modification of irrevocable trusts generally requires the consent of all named beneficiaries and/or possibly a court order.


Special Needs Trust- Special Needs Trust is a term often used interchangeably to different types of trust the principal purpose of which is to protect a beneficiary’s entitlement to various social benefits such as SSI, SSD, and Medicaid. Assets held in a Special Needs Trust or “Supplemental Needs Trust” can be used to supplement the benefits provided by a social benefits program and thereby enhance the quality of life for an individual receiving social benefits. A Special Needs Trust can be a stand alone document or can be incorporated into traditional estate planning tools such as wills and revocable living trusts in order to provide for continuing care of a disabled child, parent, or other beneficiary.


Charitable Trusts- Charitable trusts exist in several forms. Most recognized are the Charitable Remainder Trust and the Charitable Lead Trust.


Charitable Remainder Trust - A charitable remainder trust lets you convert highly appreciated securities or real estate into income for life or a term of years without incurring capital gains tax when the asset is sold. The appreciated asset is transferred into an irrevocable charitable remainder trust and is then sold by the trustee. The proceeds are reinvested, and you and/or another designated beneficiary(ies) receive income for life or a specified term of years. When the trust terminates, the remainder passes to a charity of the grantor’s (creator) choice.


There are two types of charitable remainder trusts:
Unitrust — The income you receive is a set percentage of the value of the trust's assets, which is revalued each year.


Annuity trust — Income payments are fixed and determined when the trust is set up. The annuity trust is most attractive to individuals who wish to avoid market risk.


Charitable Lead Trust- A charitable lead trust is a “mirror image” of a charitable remainder trust. A lead trust pays the income to charitable beneficiaries for a term of years or for the trust makers’ lives, after which the remaining trust assets (principal plus any growth) pass to heirs or other non-charitable beneficiaries. If you have substantial assets that you want to pass to your children or other heirs and you do not need the asset or the income from that asset now, you may consider a charitable lead trust which will create current charitable income tax deductions. Charitable Lead Trusts can, like the remainder trust, be drafted as an annuity trust or a unitrust as described above.


Family Limited Partnerships (FLP’s) and Family Limited Liability Companies (FLLC’s)-
FLP’s and FLLC’s are closely held businesses which are owned an managed by one or more family members. These entities offer numerous benefits to the small business owner when planning for disability or transfer of business ownership interests by gift or devise. FLP’s and FLLC’s can provide for the orderly transfer of management and ownership of a family business to successive generations and may offer significant advantages from a gift and estate tax perspective.

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