A Well-Coordinated Estate Plan
Having no estate plan virtually guarantees that someone else will be involved in the distribution of your assets!
On top of you and your loved ones losing control of the division of your assets, the costs associated and negative tax ramifications of an ineffective estate plan are particularly unattractive.
Even having a minimal estate plan can reduce the control you have over your assets after death.
A well-coordinated estate plan, however, accomplishes many goals including – but not limited to – keeping third parties from determining the distribution of your assets after you pass!
Pour Over Will
We are frequently asked whether a will is important in contemporary estate planning and our resounding answer is, “YES”!
A well drafted will helps achieve estate planning goals not effectively designated to a trust. For example, you may have specific desires concerning your funeral arrangements, you will likely want to establish a personal representative, potentially a guardian for your children, and you may have specific gifts that you want to devise outside of a trust.
Furthermore, the ultimate backup mechanism for funding the revocable grantor trust is the ‘Pour Over Will’. If certain assets owned by the Settlor(s), the creators of the trust (You), are not transferred to the revocable grantor trust during the settlor’s lifetime, the Pour Over Will serves to fund those assets into the trust upon the settlor’s death.
Revocable Trusts
Revocable trusts have become popular estate planning vehicles and for good reason. Revocable grantor trusts may be used to avoid or minimize probate court involvement in the settlor’s affairs both before and after the settlor’s death.
For example, if the settlor becomes incapacitated because of old age, illness, or other disability, a fully funded revocable grantor trust can eliminate the need to appoint a conservator, a person designated to handle an incapacitated person’s affairs, which can be administratively burdensome.
In addition, the funded trust ensures that, on the settlor’s disability, the property is managed in the manner and by the person the settlor has chosen.
Probate avoidance at death is one of the most common reasons for forming a trust. In addition, the trust is usually kept out of the public record and can be used to preserve privacy with respect to the settlor’s assets and general estate plan.
Having no estate plan virtually guarantees that someone else will be involved in the distribution of your assets!
After the settlor’s death, the trust can serve as an effective vehicle for asset management for the settlor’s spouse, children, or other beneficiaries. A revocable grantor trust may be used to manage property, by way of continuing trusts, for the benefit of the settlor’s spouse, children, or other beneficiaries after the settlor’s death.
The revocable grantor trust is the typical mechanism used in reducing or deferring federal estate tax liability on the death of the settlor). A trust can reduce the estate tax for married couples by maximizing the use of both spouses’ applicable credit amounts.
Because life situations and tax laws are constantly subject to change, a revocable living trust is a useful tool from the standpoint of flexibility and ease of amendment and revocation. In addition, a revocable grantor trust can be drafted to adjust to changing circumstances after the settlor’s death.
No Guarantee of Tomorrow
Many of us have come to the wise realization that we are not guaranteed a tomorrow. Therefore, we commonly encourage prospective clients to establish an estate plan now that ensures that your family will be optimally taken care of in the event that you are no longer able to do so.
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