6 Estate Planning Tips From an Attorney
Here are 6 estate planning tips you'll want to follow when preparing the foundation of your estate plan.
6 Estate Planning Tips
1. Determine what assets you want to pass to your spouse and your child
Take stock of your assets and decide how you would like them divided. It would be helpful to collect the info for your accountant if you have one, any investment advisors, and/or any other folks who assist you with managing your personal business. If your estate planning attorney does not regularly deal with taxation issues or have an LLM degree in taxation, they should be recommending that you confer with your accountant to go over not only the legal consequences of decisions you make, but also the financial impacts of those decisions, as well.
2. Find out if you are on the cusp of another income tax bracket based upon passive income
If you are near a cusp and would like to stay in the lower taxable income bracket, decide whether you want or need access to assets that could be passed into a trust to avoid movement into that higher taxable income bracket.
Consider whether you foresee a change in assets in the future that might move you into a different bracket. Also, laws can change considerably, so it’s important to revisit your planning every few years to be sure the applicable rules remain consistent and your goals are likely to be met. Consider, for instance, that the estate tax threshold went from $1.5 million in 2004 to $11.7 million at present--thus, an individual could pass much more to their children through an estate without facing tax consequences. It’s important to look at the ways in which each estate planning vehicle will be treated when it comes to your own personal taxes, vs. whether the vehicle itself (such as a revocable trust, irrevocable trust, LLC, or otherwise) will pay separate taxes, and also whether you will receive any taxable income during your lifetime from the type of entity you choose. An estate planning attorney (often with the help of your accountant) can help determine your best course of action.
3. If you have children, create a timeline for your child’s care
Often parents will choose a revocable living trust to care for their minor children as part of their estate plan. Consider major life events like education, marriage, housing/relocation, illness/injury, etc. that you’d like to cover for her or him through the terms of the trust, as well as any provisions for good or bad behavior (such as limitations on stipends if drugs or alcohol are consumed, or increased stipends for good grades or public service). While planning for the future, it wouldn't be a bad time to consider children's savings accounts as well.
4. Choose who you’d like to appoint as trustee and/or executor for your estate
Especially in cases where there have been children of prior relationships or marriages, but even in simple estates where a spouse or child may be suffering immensely from loss, it may be best to choose an executor or trustee who is:
A sibling
A good friend, or
A professional trustee who can help manage and advise as to investments
5. Determine advance directives you’d like to give (i.e., Do Not Resuscitate)
A "living will" is an advance directive that instructs about how you want to be treated should you become incapacitated. In addition to resuscitation instructions, living wills can express your preference on specific types of burdensome treatment such as compulsory food and water in cases of wasting diseases.
6. Finally, think of any other powers of attorney you’d like to see to ensure your wishes are carried out
Powers of attorney can be broad or specific, and may be triggered by a variety of circumstances--however sometimes they require that the person granting the power is legally incapacitated, which is a pretty high burden. Other times, the triggering event is merely a condition like travel, hospitalization, or some other impediment. It’s important to consider who should serve as your power of attorney, and how effective their actions may be if granted such rights. For instance, they often cannot engage in self-dealing, like transferring property to themselves, so if that’s a goal of giving the power of attorney, it’s important to consider who you can choose who will be able to do what you hope to accomplish.
If you find yourself hospitalized, having a good power of attorney document can ensure that someone can manage your property and affairs, so it’s important to consider who should be entitled to receive such important rights on your behalf and have these measures in place before you find yourself incapacitated and wishing you had already granted these powers before they were needed.
These estate planning tips cover just a portion of things to consider. Following these tips will give you a great foundation, however. Consider hiring an estate planning lawyer to help you check all the boxes. Funke Law Firm has the experience to help you create a comprehensive estate plan!
To see how Funke Law Firm can help, contact us any time. We are here for you!
This Blog is made available by Funke Law Firm for educational purposes only, not to provide specific legal advice. By using this blog you understand that there is no attorney client relationship between you and the author/Funke Law Firm. This Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.