Estate Planning – Wealth Creation to Wealth Preservation
What Is Estate Planning?
Estate planning is both an art and a science. It requires the proper balance and due care that ensures a strategic approach to the all-important human issues. Estate planning deals with the creation, preservation and transfer of personal wealth. It is the process that insures the stability and security of an individual’s accumulated wealth during life and beyond. Careful estate planning provides the appropriate disposition of assets to family members, business associates, charitable concerns and special needs circumstances, while safeguarding the beneficiaries from issues such as creditors, bankruptcy, divorce, or complacency. It will insure that assets are transferred in a mannerconsistent with the desires of the estate owner and develop an appropriate strategy for the orderly payment of all costs associated with death, including the estate tax itself.
The Planning Steps:
- Selection and integration of your estate planning team.
- Gathering of necessary information.
- Analysis of your information.
- Coordination of ideas and recommendations from various financial advisors.
- Implementation of your plan.
- Periodic review of your plan.
The Estate Planning Team Generally Includes:
- Insurance Consultant
- Financial Planner
- Trust Officer
Estate Planning Techniques
Current tax law provides for an unlimited marital deduction for assets transferred from one spouse to another. However, not all families feel comfortable in transferring all of their assets to a current spouse. Many families include children from prior marriages, pre-nuptial agreements and special needs circumstances that create an estate tax obligation at the death of the first spouse. Even if the burden of estate taxes delayed until the death both spouses, it effectively transfers the tax burden to the estate, thus reducing the assets available for transfer to the remaining beneficiaries.
Great care is taken to assure that any recommendation carefully balances possible tax savings with the extremely sensitive and personal “Human Objectives” of the clients we serve. There are many estate planning techniques which may be used:
- Sales to intentionally Defective Grantor Trusts (IDGTs)
- Estate freezing
- Annual gifting
- Gifting of annual exemption
- Family Limited Partnerships (FLPs)
- Self-Cancelling Installment Notes (SCINs)
- Private annuities
- Corporate recapitalization
- Joint purchases
- Grantor Retained Annuity Trusts (GRATs)
- Charitable trusts
- Charitable giving
- Survivorship insurance
- Irrevocable Life Insurance Trusts (ILITs)
Some of the techniques are designed to reduce or eliminate administrative fees and expenses of the estate, and some are designed to reduce or eliminate estate taxes. Others are non-tax related techniques designed to transfer property and/or income in a manner consistent with the desires of the deceased.
Sources Of Funds To Pay Estate Transfer Costs:
The sources of funds to pay the tax obligation would typically include:
- Cash or cash equivalents
- Sale of assets
- Borrow from traditional lending institutions
- Borrow from the federal government when permissible
- Life Insurance
A Well-Planned Estate:
Our estate planning team works closely with a client’s other professional advisors in developing a creative estate plan which incorporates the wishes of the estate owner with minimization of estate transfer taxes. The ultimate test of our effectiveness will be measured by how well we listened to and understood the feelings and the desires of those we serve. The outcome of a well-planned estate should incorporate the following:
- Full and complete understanding of the client’s goals and objectives.
- Reasonable efforts to insure that the client understands all of the options available.
- Prioritizing the possible solutions so that the client feels safe and comfortable with the choices he or she makes and the value received.
- Proper execution of the legal documents and financial instruments necessary to complete the client’s objectives
- A financial plan to provide for the payment of the estate and gift taxes when they fall due. This frequently involves the purchase of life insurance.
- Communication that is coordinated between the client and all of his or her advisors to bring appropriate closure to the process.
- A final “executive summary” of the plan which will enable the client to refresh his or her memory on the “high points” of the plan as needed.
Why Choose The Hebets Company
- We review all existing estate planning documents such as wills, trusts, family limited partnership agreements, life insurance trusts and charitable trusts. We provide an executive summary of the content to refresh the client’s memory of the status of their current estate plan.
- We do one or more thorough “fact and feeling” interviews to ensure that we completely understand the client’s “financial goals” and “human objectives”.
- We will conduct one or more brainstorming sessions to discuss various techniques that apply to the client’s situation. We will assist them in evaluating the suitability of each possible alternative strategy.
- We can financially model each strategy to clarify the effectiveness for income, gift, and estate tax savings.
- Once the planning has reasonably taken shape, we analyze the available methods of paying the actual taxes that will inevitably fall due.
- We compare and contrast available options to assist the client in determining which approach or combination of approaches best suits his or her circumstances.
- We work with the client’s other advisors to ensure that the plan ultimately is executed and communicated to all appropriate parties.
- We perform annual reviews of the plan with each client to ensure that the plan continues to meet the goals of the client and make changes as necessary.