While our objective is to minimize estate taxes, we will not do so at the risk of depriving you of control of your assets and financial security. We know how important it is to protect and maintain control of the assets that you worked hard to acquire, and our goal is to make sure that your wishes are carried out. Above all, we want you to feel comfortable with your estate and financial plan.
The first step in this process is to evaluate the strategies available to you in light of the current tax law and to identify the planning strategies that will best allow you to pass your assets to your beneficiaries with the least amount of tax. The next step is to prepare draft estate planning documents which are sent to you for your review and comments. Your questions and concerns are of the highest importance to us and we are available in person, by phone or email to address any questions or concerns that you may have about the documents or the process in general. Once all questions have been addressed, the final version of the estate planning documents are prepared and a final meeting is then scheduled to execute these documents and to put your estate plan in place.
Depending on your individual circumstances your estate plan may include a wide variety of estate planning strategies which may include:
If you are married and your combined estate exceeds the federal estate tax exemption, a credit shelter trust can serve to reduce your inheritance taxes. With a credit shelter trust, each spouse is able to take advantage of the full estate tax exemption. Without proper planning, often individual exemptions are wasted in particular where proper attention is not paid to the individual titling of assets.
An inter vivos revocable trust is often referred to as a Living Trust and is one in which the assets in the trust are within reach and control of the grantor of the trust. The grantor retains the ability to amend the trust and/or revoke the trust but this retained power also keeps the assets of the trust taxable in the grantor’s estate. Before creating a Living Trust it is important to understand that it does not provide a savings on estate taxes since the grantor maintains control and direction of the assets transferred to the trust. Individuals who transfer all of their assets into a Living Trust prior to their death may avoid probate, although the benefit of this must be weighed against the cost of creating and administering the Living Trust. The Living Trust is not right for everyone but can be the correct solution in limited circumstances.
An irrevocable trust is one where the creator abdicates all control of the trust and its assets. The creator of the trust does not maintain control over it, has no power to revoke the trust, and has no claim of ownership in the trust property. Irrevocable trusts are beneficial when to life insurance or to receive assets anticipated to significantly increase in value in the future such that the future appreciation occurs outside of the taxable estate. However, tax savings must always be weighed against the loss of use and control of the assets transferred to the trust.
Most gifts to minors arise from a parent or grandparent’s desire to fund a child’s education or other special purpose. These gifts are usually designed to protect against unwise spending on the part of the minor, or to protect the assets from creditors. Minimizing estate taxes and shifting wealth to future generations can also be a benefit. However, under the Uniform Gift to Minors Act or the Uniform Transfer to Minors Act the age of majority depends on state law, which in New York State is 18 unless at the time the gift is made the age of 21 is specified. Many parents and grandparents consider even age 21 far too young to receive substantial wealth. To maintain assets for the benefit of a child significantly past age 21 a trust can be created for the benefit of the minor with terms for distribution of income and principle in conjunction with the exact wishes of the grantor. For example, a trust for the benefit of a minor may provide that income can be distributed beginning at age 21 but principle distributions occur staggered at the more mature ages of 25, 30 and 35. Of course, the trust can also provide that the Trustee have discretion to distribute principle for health, education, welfare or maintenance at anytime so the grantor is assured that principle distributions will not occur too early but also that the Trustee can use discretion to distribute anytime to address legitimate needs of the beneficiary.