FAMILY ASSET DISTRIBUTION PLANNING
By
Harold S. Small, J.D., CPA (inactive), AEP
858.759.4600
For many years people have referred to
estate planning thinking in terms of estate tax savings. However, we currently have no estate tax, and
the planning is really for the distribution of assets to family members.
What is Family Asset Distribution
Planning? It is determining who is to
get what and when and then making that happen through appropriate
documents. The basic tools are, of
course, a will and a trust. The language
in these documents names those that are important to the author
[testator/trustor(s)], designates who is to receive personal property, who is
to receive other assets, when distribution of the assets is to occur, who will
make decisions about and direct the administration of the estate after death,
and who will act as the guardian of minor children. These issues are much more important than tax
planning.
As discussed in another article at
this site, consideration should be given to when it will be best for assets to
be distributed. For example, children
need protection either because of their minority or their spending habits. That protection can come in the form of
providing for distributions of income only for a period of time, distributions
subject to other standards for a period of time, and distributions at different
ages or increments of time following the death of the testator/trustor. Directions may also be given to spend monies
from a trust for specific purposes for one or more beneficiaries.
Who is to be given Mom’s wedding
ring? Who is to be given grandpa’s stamp
collection? Who is to be given
tools? Who is to be given a watch? Who is to be given a specific car? These are all questions that can have answers
specified in a will and/or a trust. You
can control what occurs instead of leaving it to interpretation of a statute.
Other documents that need to be
considered and/or used in connection with Family Distribution Planning include
an Advance Health Care Directive (living will in some jurisdictions), durable
power of attorney, property agreement or declaration, beneficiary designations
(e.g. insurance, employee benefit plans, and IRA’s), title transfer documents
(e.g. grant or quitclaim deed, assignment of partnership interest, new stock
certificate), and other documents depending upon jurisdiction.
The Advance Health Care Directive
provides the name of the person(s) that will be asked to make medical decisions
for you if you cannot make them yourself.
This document also gives you the ability to give instructions as to what
you want done under various circumstances.
An attorney can assist you with the preparation of this document.
Beneficiary designations should be in
place for retirement accounts, IRA’s, and life insurance. By having beneficiary designations in place
(including alternates/successors) the asset(s) will not be subject to
estate/probate administration. Also, the
assets go where you want them to go. By
using an irrevocable life insurance trust you may remove assets from being a part
of an estate administration and also from estate taxes.
Title transfers/conveyance of title to
a trust is important so that the assets are not subjected to estate
administration, sometimes referred to as probate. It saves fees and costs, it saves time, it
limits inconvenience, and much or most of the information relating to assets
may be quiet as estate administration may not be needed.
While estate tax issues may become
important once again, they currently are not as important as addressing some of
the issues and questions posed above. If
you do not have planning documents (at a minimum a will and a trust) then you
should see an attorney at your earliest opportunity. As may be evident, only some of the time do
we have an idea as to when death may occur from a specific illness. All too frequently, death surprises us with its
suddenness. The best way to prepare and
to protect your family and loved ones is to review your planning documents and
get them updated. If you do not have a
will and a trust, then call an attorney and schedule an appointment to have the
documents prepared for you.
The attorneys having the greatest
experience and that are best suited to assist you are those that have the
designation of Accredited Estate Planner™, those that
belong to Estate Planning Councils affiliated with the National Association of
Estate Planners and Councils, and those that have certification from a state
bar association where certification is possible. Seek out and use an attorney that can assist
you.
THE FOREGOING
CONCEPTS AND IDEAS ARE GENERAL STATEMENTS AND ARE INTENDED TO PROVIDE CONCEPTS
FOR CONSIDERATION IN BUSINESS AND TAX PLANNING. CAREFUL CONSIDERATION NEEDS TO
BE GIVEN BY THE READER REGARDING THE USE AND APPLICATION OF THE CONCEPTS. YOUR
LEGAL AND TAX COUNSEL SHOULD BE CONSULTED BEFORE THE IMPLEMENTATION OF ANY OF
THE IDEAS INDICATED HEREIN OR USE OF THE INFORMATION CONTAINED ABOVE. SHOULD
YOU HAVE QUESTIONS REGARDING THIS MATTER, HAROLD S. SMALL, ESQ., CAN BE REACHED
AT
© 2010 by Harold S. Small, J.D., CPA (inactive), AEP
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