Estate Planning

Ensure that your wealth goes to those you want, instead of 300 million people you don’t know

Estate planning isn’t only for old or wealthy people. There are no minimum age or net worth requirements. Anything that you care about–from an old rocking chair that belonged to your grandfather to a cabin where your family spends all its vacations–is important enough to justify at least basic estate planning.rounded4

Estate planning is nothing more than developing a process for identifying and transferring all of your property from one generation to the next or within a generation. If you’re immortal, maybe you don’t need to worry about estate planning…

Sometimes young families think they don’t have enough property or “stuff” to justify estate planning. But if you have a child under age 18, you have estate planning concerns. Who will raise your child if you can’t? Who will manage any cash or assets the child might inherit?

Why You Don’t Want To Put It Off

Many people put off estate planning because it involves thinking  and feelings about death. It seems tough to talk about that in terms property ownership, business arrangements, marriage and even family relationships. Parents ofte avoid talking to children because they don’t want to hurt anyone’s feelings or they aren’t comfortable talking about their mortality. As uncomfortable as it may be to talk about death, how comfortable would it be for your survivors if you died without a plan? Without a plan, state laws dictate what happens to your estate, and do you think they know what’s best or what you would want for your family?

Wills and Trusts

Without a will or trusts your property will be distributed according to state laws. For example, if you are married with no children, your property may be split equally between your surviving or between siblings. If you are married and have children with more than one spouse, property may be divided between equally between your surviving spouse and children of the deceased. If  you are unmarried with children, your property could pass in equal shares to your children, instead of a trust to be managed for their benefit. The court will also decide who would be your conservator/guardian. If it’s difficult for you to choose a guardian, imagine your siblings, parents and a judge having to make the decision.rounded10

What To Consider In Writing A Will: Who Gets What

Beneficiaries are those people and organizations to which you leave your property. Most people have a pretty good idea of who their primary beneficiaries will be. People in second, or subsequent marriages, where children from a prior marriage involved will probably want to use trusts to hold assets.

You also need to have alternate beneficiaries–people or organizations that would receive your property should a direct beneficiary not outlive you.

Do You Have Minor Age Children or Special Need Family Members?

Parents of children under the age of 18 have two important planning concerns. The first is providing for choosing a guardian of their children should both spouses die at the same time.  This person may oversee and be fiscally responsible for managing the assets of minor children, or you may want to designate a different person to handle this role. Special need family members requiring care and support will need to be addressed with the help of professionals in this area.

Transferring Property Using Wills And Trusts


A will is a document that describes how property will be distributed after a person’s death. By making a will, an individual can decide who, when and how a beneficiary shall receive his or her property.

A will has no effect during the testator’s (the person making the will) lifetime. Anyone 18 years of age or older can make a written will. Although a person can make his or her own hand-written will, in most cases, it is best to consult with a lawyer to be sure your written document will accomplish your objectives.


A revocable living trust is a legal arrangement by which an individual shifts ownership of property from personal ownership into a trust. A revocable can be changed or terminated at any time. A living trust is an effective tool for handling your financial affairs if you become incompetent. For example, you might want to have arranged for someone to manage your affairs due to factors such as advanced age, a serious illness, or even an accident. The trust defines incompetence, and states how your financial affairs are to be managed by the trustee.

A living trust allows your estate to avoid the time and expense of probate. Assets owned by a revocable living trust are non-probate assets. The trustee has legal title to the trust assets and can transfer title, without probate, to the beneficiaries named in the trust agreement.

Living Trusts do not provide any income tax advantages, and income earned in a revocable living trust is subject to taxes to the trust. Trusts also do not protect assets from nursing home costs, under current Medicaid rules.

Irrevocable Trusts involve the irrevocable transfer of all ownership rights to a trust. When you make an irrevocable transfer of property to an Irrevocable Trust, the assets will be outside out your estate for tax purposes.

Death and Taxes

Each time property transfers to a new owner there is a potential tax.
When property is sold there may be an income tax on the gain from the sale.
When property passes to a new owner because of the death of the former owner, state and federal estate taxes may be assessed. When property is transferred by gift, there may be a federal gift tax.

State Inheritance Taxes

At death your gross estate includes everything that you own at your death. If the potential value of your estate at death, or if you are married, the potential value of you and your spouse’s combined estates, is close to or exceeds the exemption amount, estate planning is a concern.

Gift Taxes

If you make substantial gifts of property and/or money to family members and friends during your life, you may have to pay a federal gift tax. Under present tax law, each year you can give an individual gifts valued at no more than $11,000 free of Federal gift tax (gift taxes are paid by the giver).

Passing Heirlooms To Family Members

There are two ways to pass heirlooms to family members: give them away during your lifetime or at your death. You may want to have a discussion about what family members would or would not want. The twelve place settings of fine china may not be of interest to one child, but could be to another. You may also find an heirloom holds special memories for a particular family member.

If you give items away during your lifetime you get to experience the joy of the person receiving the item. However, you need to be okay about actually giving away the items.

A common way to make gifts of heirlooms is through a trust or will, even through a side letter, attached to your will, referred to in the will.

Planning for Incapacity

Nothing may be more difficult than planning for a managing your own affairs, if you cannot take care of yourself.  With a couple of legal documents, you can ensure that your medical and financial desires are carried out if you are unable to act for yourself. These legal documents are called health care proxies (Power of Attorney) and living wills.

Health Care Proxies (Power of Attorney)

A health care power of attorney is a document that give someone the ability to make medical decisions for you, when you unable to make them yourself. You can give your health care agent authority to consent to your doctor providing, withholding, or stopping any medical treatment, including life sustaining procedures.

You can limit your health care agent’s powers, or give them unlimited powers. You should communicate your intentions with your agent, so that have guidance about how you want your health care handled. You should provide a copy of your health care power of attorney to your health care agent and also to your primary physician. Also, you should keep a card in your wallet identifying who has your health care power of attorney, as well as where your living will is located.

A Living Will

A living will is a written statement of your wishes concerning the use of medical treatment to keep you alive, where there is no reasonable expectation of recovery from an illness or accident. A living will grants permission for medical staff to withhold or withdraw life support systems that would otherwise simply prolong death.

The choice to have a living will and a health care power of attorney depends on your personal moral and ethical beliefs. If you want to live at any cost, living wills would make this known to your family and physicians. Without a living will, your family may not be able to agree on what to do. Living wills remove makes the decision yours and not your family’s.

Updating Your Plan

Once you draft a will or trust, you may want to update it. Changes in marriage, moving to a new state, birth of children or grandchildren and changes in tax laws are all reasons to update your estate plan.

Life Insurance: An Invaluable Estate Planning Tool

Many families find life insurance to be an important and useful tool in estate planning. Life insurance can help accomplish families’ financial needs by providing:

  • Immediate cash for payments of debts, costs associated with illness, burial expenses, costs of administration, other settlement costs, and payment of federal and state estate taxes, which would in turn, reduce or eliminate the chance of a forced sale of assets.
  • Funds for the surviving partner to buy the partnership interest of the deceased partner from the heirs. This enables the business to continue as an on-going enterprise.
  • Cash when an heir has a contract to buy a family member’s farm/ranch or other business at his/her death. The heir could insure the family member’s life as a means of providing cash to purchase the business should the family member’s death occur before the heir has built enough cash reserves.
  • Cash for an adult son or daughter who is taking over a family business. Such action offers protection for parents so that the death of the adult child will not disrupt the business.
  • Life insurance proceeds can be used to provide heirs with “equitable” treatment if the parents’ desire is to pass the business intact to son or daughter. Leaving the business to the operating heir and life insurance proceeds to other heirs prevents the operating heir from having to buy out the interests of other heirs when he/she may be unable to afford it.
  • Life insurance can also be used to create an estate where one would not otherwise exist.

Contact us to learn how insurance fits in with your overall estate plan.

Note: Park Avenue Securities, Guardian or their Representatives do not provide legal or tax advice. Consult with your attorney, accountant or advisor for advice concerning your particular circumstance.