Sometimes the simple way is not best way. Estate planning should fit your life, and life can be complicated. Advanced estate planning may be right for you.
Basic estate planning is . . .
Just generally speaking, a simple estate plan usually includes a Will, a durable power of attorney, a healthcare power of attorney and/or a living Will. But basic estate planning covers basic needs. Some people need more advanced strategies. To find out if you need advanced estate planning, here are a few questions you might want to ask yourself.
Do I need to reduce estate taxes?
One goal of advanced estate planning is to reduce potential estate taxes. Prior to tax reform, the estate tax exemption limit was a little over $5 million. This meant that estates worth less than the exemption limit did not have to pay estate taxes. After last year’s tax reform, the exemption limit is now a little over $11 million.
The increase in exemption limit is nice, but most of us don’t have high net worth estates. However, anyone with an estate that even comes close to the exemption limit should consider estate tax reduction strategies.
Will a trust help with my estate planning?
Trusts are a powerful estate planning tool. They’re just not a good fit for all estates.
If advanced estate planning is needed, though, one or more of the following trusts might help:
- Qualified Personal Residence Trust (QPRT). Transferring your residence to a QPRT helps reduce the size of your estate. In addition to possible estate tax relief, you may get relief with income taxes also.
- Grantor Retained Annuity Trust (GRAT). When using this irrevocable trust, you’ll receives annuity payments from the trust assets. Upon your death, assets typically transfer to the heirs with little or no tax consequences.
- Dynasty Trusts. Also known as generation-skipping trusts or legacy trusts, the assets you transfer to the trust pass to your grandchildren. The estate’s tax burden should be reduced.
- Irrevocable Life Insurance Trusts. Your insurance payouts are transferred to this trust. The funds may be held in trust and paid out to your beneficiaries.
- Spousal Lifetime Access Trust (SLAT). This trust allows a married couple to benefit from the trust, while naming descendants as beneficiaries.
The trusts mentioned above may not be the only solution or best solution available to you.
Do I have assets to protect?
Advanced estate planning includes asset protection strategies like:
- Business succession plans,
- Legitimate offshore trusts,
- Effective gifting strategies, and
- Family limited liability companies.
The components of your estate plan should work like clockwork – every piece in place and doing its job.
Do you need advanced estate planning?
A simple Will isn’t enough for someone with a high net worth estate or complicated family structure.
Talk to one of the attorneys at the Keystone Law Firm to learn your estate planning options.
Call us at (480) 418-8448 or visit our website at keystonelawfirm.com to check out some of our free seminars. Serving the greater Chandler area, including Mesa, Ahwatukee, Sun Lakes, Gilbert, and Tempe.