Estate Planning

probate, lawers fees/avoid, 6 month for creditors, titling of accounts etc.

estate tax, irrevocable


capital gains and step up baisis



living trusts
AB trust - and other trusts


  • PDF breakdown of all income tax brackets, retirement plan income and contribution limits, Gift and Estate tax, Education, Capital Gains Tax
  • 2011 Gift and Estate Tax
    Gift tax annual exclusion $13,000
    Highest estate and gift tax rate 35%
    Estate tax exemption $5,000,000
    Lifetime gift exemption $5,000,000
    GST exemption $5,000,000
    Annual exclusion for gifts to noncitizen spouse

    Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity.

    Contents [hide]
    1 Estate planning devices
    2 Remainder
    3 Tax
    4 Mediation
    5 See also
    6 References
    7 External links

    [edit] Estate planning devicesEstate planning involves the will, trusts, beneficiary designations, powers of appointment, property ownership (joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety), gift, and powers of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. After widespread litigation and media coverage surrounding the Terri Schiavo case, many estate planning attorneys[weasel words] now advise clients to also create a living will. Specific final arrangements, such as whether to be buried or cremated, are also often part of the documents. More sophisticated estate plans may even cover deferring or decreasing estate taxes or winding up a business.

    Many people (and even some attorneys)[who?] confuse a living will with a durable medical power of attorney. A living will sets out directives concerning end of life decisions, whereas a durable power of attorney gives all medical decision making authority to an appointed individual upon incapacity, including end of life decisions. Some people have both a living will and a health care power of attorney. In some countries, legal trust lawyers and estate planning attorneys may require or prefer to have some form of accreditation or licensing, such as an MTI or CSEP designation.[1]

    [edit] RemainderThe tax code allows people to set up charitable remainder trusts and set up qualified personal residence trusts to own their personal residence yet leave it to their children without estate tax.

    [edit] TaxBecause the United States tax code does not tax life insurance proceeds as income, a life insurance trust could be used to pay estate taxes. However, if the decedent holds any incidents of ownership like the ability to remove or change beneficiary, the proceeds will remain in his estate. For this reason, the trust vehicle is used to own the life insurance policy and it must be irrevocable to avoid inclusion in the estate.

    [edit] MediationMediation serves as an alternative to a full-scale litigation to settle disputes. At a mediation, family members and beneficiaries discuss plans on transfer of assets. Because of the potential conflicts associated with blended families, step siblings, and multiple marriages, creating an estate plan through mediation allows people to confront the issues head-on and design a plan that will minimize the chance of future family conflict and meet their financial goals.

    The law of trusts and estates is generally considered the body of law which governs the management of personal affairs and the disposition of property of an individual in anticipation of the event of such person's incapacity or death, also known as the law of successions in civil law. Its techniques are also used to fulfil the wishes of philanthropic bequests or gifts through the creation, maintenance and supervision of charitable trusts.

    In some jurisdictions, such as the United States, it can overlap with the area that has come to be known as elder law that deals not only with estate planning but other issues that face the elderly, such as home care, long term care insurance or social security or disability benefits. There may also be overlap with areas of the law touching on End-of-life issues, not solely for the elderly, but also persons with terminal conditions.

    Contents [hide]
    1 Estates
    2 Uses of trusts
    3 Use of estates and trusts
    4 See also

    [edit] EstatesIn common law, an estate consisted of the tangible assets of real and personal property which belong to a natural person. The property of the estate must either be bequeathed through a will or transferred through the laws of intestacy if there is no will. A will is the most commonly used legal instrument for the distribution of the property of a deceased person. Before property can be disposed of pursuant to the terms of a will, the will must be submitted to a probate court having jurisdiction of the estate of the deceased. Probate is often considered a relatively lengthy and expensive process, albeit one which may provide greater safeguards with regard to the rights of a deceased person's beneficiaries, though probate often is contested by creditors or disgruntled members of the family of the deceased who feel they have not received their fair share of the deceased's property.

    [edit] Uses of trustsMain article: Trust law
    In order to expedite the process of transferring assets to intended beneficiaries, some people choose to arrange their property so that it can bypass the probate process upon their deaths. For example, placing property into a trust before death (as opposed to a testamentary trust) will often allow the accomplishment of the objectives of property distribution without coming under the jurisdiction of a court and the possible redistribution after a lengthy contested probate process and trial. Similarly, jointly held property (in common law systems), life insurance, annuities, US Tax Code section 401(k) Retirement Plans or Individual Retirement Accounts (also known as Registered Retirement Savings Plans in Canada) will also avoid probate as these devices allow property to transfer to beneficiaries outside the probate process.

    Special needs trusts are created to ensure that beneficiaries who are developmentally disabled or mentally ill can receive inheritances without losing access to essential government benefits.

    [edit] Use of estates and trustsAnother major factor in trusts and estates law may be to minimize one's tax exposure. After an applicable exempt amount, the United States federal estate tax very quickly approaches 50% of one's taxable estate. The proper use of trusts may reduce one's tax burden. The applicable exempt amount is currently two million dollars in 2006. The exempt amount is scheduled to increase to three and a half million in 2009, after which the estate tax is temporarily repealed for one year in 2010. The year after, the estate tax is scheduled to be reinstated, with the previous exemption of one million dollars.

    Trusts may also allow people a certain limited amount of control of how the amount held by the trust is handled. For example, one could leave money for somebody who may not be mature enough to handle money, and state that the money can only be used for health, education, support and maintenance of that person until the age of 35, upon which time the remaining income and principal will be distributed. One can also distribute one's assets to charitable purposes by creating an irrevocable charitable trust that may distribute the principal or the income of the trust much in the same manner as a private foundation.