With 2017 already here, it may be time to once again revisit your estate planning strategy. As time rolls on, changing life circumstances should motivate all of us to update our estate plans and ensure that they still meet our needs. Of course, our lives aren’t the only things that change over time; estate planning techniques and strategies often go in and out of fashion too. With that said, here are the top ten estate planning techniques that we think clients should be considering in this new year.
The Revocable Trust
In addition to your will, your revocable trust can help form the backbone of your estate planning strategy. It can help many of your assets avoid the time and cost associated with probate, and ensure that your heirs receive their inheritance in a manner of your choosing. You can maintain control of it while you’re still alive and then rest assured it will take care of your loved ones when you’re gone.
An Irrevocable Trust for Life Insurance
If estate taxes are a concern, you can help to minimize your obligation by creating an irrevocable trust for your life insurance policy or policies. That way, the money paid out by those policies goes directly into your trust, bypassing the rest of your estate. And since the trust is irrevocable, the IRS won’t view the assets within the trust as part of your estate. The end result? Your life insurance proceeds won’t be counted for estate tax purposes.
Family Limited Partnerships
Creditor concerns can be a real problem in many family relationships. With a family, limited partnership, you can provide an extra layer of security for assets to protect them from any of the partners’ creditors. This entity enables parents to continue to gift assets to children and enjoy substantial reductions in the transfer taxes levied against those gifts, while still maintaining management control over the partnership.
Financial Power of Attorney
Everyone should have a financial power of attorney – preferably of the durable variety. The problem we all face is a common concern: health is an uncertain thing. If you lost your ability to manage your own affairs tomorrow, your financial concerns will end up at the mercy of a guardian appointed by the court – and you’ll get the pleasure of paying for the service. With a durable financial power of attorney, you can appoint your own agent to represent your interests in those situations.
Advance Directive for Health Care
Your medical decisions deserve protection too. If you lose the capacity to manage your health care decisions, who communicates your wishes to the doctors and nurses charged with your care? Who tells them which treatments you’re willing to accept and which you’d like to refuse? An advance directive can ensure that you have a health care proxy to represent your interests, and can avoid the need for a court-ordered guardianship.
Charitable Remainder Trusts
Americans love their charities, so why should your charitable giving end just because your life is over? With a charitable remainder trust, you can transfer assets to a trust, enjoy an ongoing income stream for the rest of your life – or a set period of years, and then have the remaining assets in the trust go to the charity when that period ends or you die.
Nursing home costs continue to rise, and few of us will have the assets needed to pay for them when we reach our senior years. Medicaid planning can help you to arrange your estate now in ways that will ensure that you qualify for the long-term care benefits you might need later in life.
Annual Gift Tax Exclusion
If estate taxes are in your estate’s future, then you should take every action available to reduce that tax obligation. One important option is to make sure that you use the annual gift tax exclusion to the fullest extent possible. This is an exclusion that is separate from the lifetime exemption that you have for gifts, and can help you to reduce the size of your estate in significant ways. You are permitted to give up to $14,000 to any given individual each year. You can repeat that gift on an annual basis, and can give the same amount to as many people as you choose.
Irrevocable Education Trust
While there are many trust types in use by estate planners today, the irrevocable education trust is one that deserves more attention. With education more expensive than ever before, an irrevocable trust can be a great way for parents or grandparents to provide a fund that can help to pay for a child’s higher education. And since the trust is irrevocable, you can rest assured that the funds won’t be lost to creditor actions before the child has a chance to benefit from those assets.
Business Succession Plan
If you own a business, then you need to know that your estate planning needs may be dramatically different than many of your peers. For example, you need to include business succession planning to ensure that your company goes to the right heirs when you pass away. That can be an absolute necessity when you have certain heirs who want to work in the business and others who want nothing to do with it, since your succession plan can protect the company and help to avoid liquidation fights and other conflict.
At the Law Offices of Mary A. Miller, P.C., we’re convinced that 2017 can be your best year ever. To protect yourself and your family in this and future years, however, you need estate planning strategies that work to safeguard those interests. We’ll work with you to help you implement as many of these top 10 estate planning techniques as you need to reach your long-term legacy goals. To learn more about how these techniques can benefit you, and get the help you need to ensure that your comprehensive estate plan is as effective as possible, contact us online or give us a call at (914) 939-6565 today.