Estate planning is all about protecting your loved ones, which means, in part, providing them with protection from the Internal Revenue Service (IRS). It is essential for estate planning to transfer assets to heirs with a view to creating as little tax burden as possible for them. Estate planning is the preparation of tasks that serve to manage a person's asset base in the event of disability or death. Planning includes bequest of assets to heirs and settlement of estate taxes.
Most estate plans are established with the help of an experienced probate lawyer. If you were to ask 10 different couples what their estate planning goals are, you'll probably get 10 different answers. However, after a deeper survey, you'll find that most married couples share the same basic estate planning goals. Knowing these goals helps both the couple and their estate planner determine what might be the best way to structure their estate plan.
Below are eight of the most common estate planning objectives that influence the estate plan of a married couple:
- Minimizing taxes
- Protecting privacy
- Ensuring assets pass to appropriate beneficiaries
- Distributing assets after death
- Protecting loved ones from fraudulent schemes
- Providing for minor children
- Minimizing wealth transfer taxes
- Making end-of-life health decisions
Many couples prefer estate plans that maintain their privacy when given the option. However, this tends not to be a dominant problem in most couples. However, recently there has been a significant increase in the number of elderly people being targeted by fraudulent schemes and near-fraudulent requests. As a result, to the extent that an estate plan can protect the privacy of a married couple, especially as they age, this can help protect the surviving spouse from being targeted by such plans.
Another strategy that a wealth planner can adopt to minimize estate tax liability after death is to donate to charitable organizations while you are alive. Through thoughtful reflection and discussion, all your estate planning objectives should be discussed in “plain English”. An effective estate plan usually addresses who will inherit your assets and often includes a detailed plan for end-of-life health decisions in case you become unable to make these decisions yourself. Miller is the founding member of Miller Wealth Law Group LLC, a boutique firm that helps clients protect and preserve their wealth by combining the practice areas of asset protection, estate planning, tax planning and business planning in a unique way.
Proper estate planning allows you to select the person or persons who will raise your minor children if both you and your spouse die prematurely. More than any other type of tax, wealth transfer taxes (which include donation, wealth and generation skipping transfer or “GST” taxes) can be considered penalties imposed for poor planning and ignorance of the law. The techniques used for structuring succession plans for common profiles of married couples range from creating limited family partnerships to taking advantage of wealth tax discounts, maintaining trust life insurance policies, and naming specific types of beneficiaries in their legal documents. Estate planning is an ongoing process and should be started as soon as a person has a measurable asset base.
Thinking about your legacy and shaping your estate plan is an important part of the ongoing financial planning process. In addition to these common objectives listed above, your client may have other additional estate planning objectives.