Estate Planning 101

Estate planning 101.

Have you started? Where do you start? What should you know?

Beginning to plan and starting your plan is often the most difficult step. I have a good friend who is also my client that is learning this lesson. He has several start up business interests, recently married within the last few years, a new child and one on the way. Despite his good intentions, he has not started. Should he have any concerns?

If something untoward should occur to him, his wife and children would face the delays and uncertainty inherent in a court probate. Most of us who cruise through our thirties, forties and beyond believe ourselves immortal, delaying planning often until retirement when it is “necessary”. However, there are two reasons to plan now, and not to wait. Unfortunate and untimely deaths occur. Even in my circle of family and friends. Some planned and some did not. For those who did not, their loved ones are left with the time-consuming and expensive probate process. But there is even a better reason. Planning your estate really means, organizing your assets, understanding what you have and where they will go once you pass on. Advanced planning can reduce the impact of the estate and gift tax, sometimes income taxes and ensure more of your assets are transferred to your loved ones and can protect against creditor claims. Planning means understanding and thereby often improving your accumulation and retention process.

There are many tools in the estate planner’s arsenal, the beginning tool is often the revocable family trust, a grantor trust created while both are alive. This instrument does not impair the grantor’s or creator’s ability to continue enjoying his or her assets while each are alive. Moreover, these trusts are changeable during their joint lives, but upon death, if properly funded, avoid the time and expense of probate, thereby providing a seamless transition upon death. There are many other tools depending upon the nature of assets, including many irrevocable trusts, such QPRT’s and self-settled grantor trusts or Nevada Domestic Asset Protection Trusts, DAPT’s. These devices can be employed to provide additional flexibility and protection depending upon your needs and concerns. Ask your estate planning attorney what makes sense for you.