Protect Your Family with an Estate Plan
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The Levin Law Firm wishes you and your family a happy and healthy Easter!
This Easter, we remind you to help your clients protect their loved ones by planning for the future. Estate and financial planning help ensure that health care and financial goals are achieved, in the event that clients become incapacitated or pass away. A comprehensive estate plan provides peace of mind to your clients and their families.
Regardless of net worth, if your clients are over eighteen (18), it’s important to have a basic estate plan in place. A basic estate plan should include a Will, Financial Durable Power of Attorney, Advance Medical Directive (living will and health care proxy), and HIPPA Waiver Authorization.
Estate planning may also include trusts, which enable clients to put conditions on how and when their assets will be distributed in the event of death. To learn more about estate planning, please visit our website.
Financial planning often includes retirement accounts, investments, life insurance, annuities, and long-term care insurance. Remind your clients that it is never too early to start financial planning for their future!
The Levin Law Firm provides comprehensive estate planning services to our clients, who desire to protect themselves and make sure that their property distributes to their designated beneficiaries at the right time and in the proper manner.
If your clients are ready to begin working with an estate planning attorney, in order to update or establish their estate plan, or desire specific material about the importance of having an up-to-date estate plan, please call Ginni or Laura to arrange an appointment!
Oscar-winning actor Philip Seymour Hoffman’s Will was filed for probate and provides a cautionary tale when it comes to estate planning mistakes.
Here are four (4) things he could have done differently to ensure privacy, protect his beneficiaries, reduce estate taxes, and maximize the transfer of property to his family:
Create a Revocable Living Trust
Hoffman was a public figure who valued his privacy. Yet by not establishing a Revocable Living Trust, he let the world in on his private life when his Will was admitted to probate. We now know that his son will inherit his share upon attainment of age thirty (30) and we’ll also know the total size of this estate when an inventory is filed with the Court, as required by law.
While a Will is a cornerstone of an estate plan, the terms and provisions contained in a Will become a public record when this legal document is filed with the probate court. In contrast, a Revocable Living Trust is a private legal agreement, which is not filed with the probate court upon death. Therefore, a Trust funded during his lifetime would have allowed Mr. Hoffman to have kept his private wishes private.
Update an Estate Plan to Protect Beneficiaries
Mr. Hoffman signed his Will in 2004 and never updated it, so his two young daughters were not mentioned or provided for in his Will. His estate has been valued at $35 million, and his executor is his long-time companion who is also the mother of their three children. While after- born children are provided for by state law, Mr. Hoffman lost a valuable planning opportunity to create trusts for his daughters, which could easily have been established under the terms of an up-to-date Will or Trust.
Utilize Asset Protection Strategies
While Mr. Hoffman did create a Trust under the terms of his Will for his son Cooper, (appointing Cooper’s mother as sole trustee), that Trust will terminate when Cooper turns thirty (30) years of age. As a result, all assets comprising Cooper’s share of his father’s estate will distribute to him outright in one lump sum. Instead, Mr. Hoffman could have created a Lifetime Asset Protection Trust that would have safeguarded Cooper’s inheritance, protecting him from the claims of future predators, creditors, and lawsuits. In addition, incentive provisions could have been included in Cooper’s Trust which could have encouraged him to become a responsible and productive member of society.
Use Tax-Saving Techniques
Since Mr. Hoffman was not married to his long-time companion, his estate will not qualify for the unlimited marital deduction. As a result, there will be an enormous estate tax bill to pay, both state and federal, due in cash, nine (9) months after his date of death. The use of other tax-saving estate planning strategies, including an Irrevocable Life Insurance Trust (ILIT), could have allowed transfer taxes to be paid FOR his estate instead of FROM his estate, preserved valuable assets and resulting in more property passing intact to Mr. Hoffman’s family.
If you have an estate planning question and/or idea for a future edition of Estate Planning Matters, please email us or contact attorney Phil Levin at (610) 977-2443.
Many clients and advisors make the mistake of thinking that once they have established their estate plan (i.e., Will, Trust, Powers of Attorney) they won’t have to change or update these legal documents. Since change is the only constant, please remind your clients that estate plans should be reviewed and updated on a regular basis. Some of the most important reasons to modify an estate plan are whenever there are significant changes in personal, family, or financial circumstances.
The following events may trigger the need to update an estate plan:
Change in marital status, including marriage, divorce, separation, or death. Both spouses, or the surviving spouse in the event of death, should update their estate plan upon a change in marital status.
Loss of a child or the addition of a child in the family, whether by birth or adoption. If the client has remarried and now desires to leave assets to new step-children, they will need to revise their estate plan. If not legally adopted, step-children have no claim to any assets of a step-parent unless specified in estate planning documents.
Move to a different state. The laws of different states can vary considerably. For example, community property and common law states differ on their views of property ownership. States also have different inheritance tax rules. Therefore, couples should review their estate plans when they move from one state to another.
Change in income or wealth of either the client or a beneficiary. Your client may decide to change who gets what property, and how much property, based on changes in their own personal circumstances or in the beneficiary’s. As the client acquires or disposes of property, he or she should review their plan, with the assistance of a competent estate planning attorney, to ensure that significant changes are taken into consideration. Of course, if the client is leaving all assets to one beneficiary, it may not be necessary for the client to make changes to the estate plan when assets fluctuate in value.
Major tax law changes. Major changes in tax laws can affect how much tax the client’s estate or beneficiary pays on property which is inherited from the client. The client will want to consider how those taxes will be paid by the estate or surviving beneficiaries.
Spring is an excellent time of year to meet with clients and suggest reviewing and updating their estate plans.
Please contact Laura at The Levin Law Firm to arrange a complimentary consultation with attorney Phil Levin to discuss the estate planning needs of your clients.
More than 33% of high net-worth individuals do not have confidence in their beneficiaries ability to handle their inheritance responsibly, according to a new study by Barclays Wealth. This survey canvassed more than 2,000 individuals in 20 countries, each of whom had more than $1.5 million in investable assets, and 200 with more than $15 million. However, 96% of survey respondents said they still plan to leave their fortunes to their children, with 70% saying they would divide their inheritances equally among beneficiaries.
The high level of concern and distrust that parents expressed, about their heirs’ ability to manage their anticipated inheritance, suggests the importance of using trusts as part of a comprehensive estate plan. In fact, 60% of respondents said their children would require a high level of professional advice as they establish estate plans to protect their families. Nevertheless, 23% of individuals surveyed said they do not have a Will – a remarkably large number, given the high net-worth of the respondents!
This study clearly indicates the need for financial advisors and estate planning attorneys to counsel their clients on implementing estate plans that avoid a lump-sum windfall to the beneficiaries in order to protect them from their inability, their disability, their creditors, and their predators, including ex-spouses.
At The Levin Law Firm, we have found that our clients often desire a comprehensive estate plan designed to encourage heirs to work hard to advance their own careers, as opposed to waiting for an inheritance, that may not come until the heirs are past retirement age. To the extent possible, and where appropriate, estate planning should also take maximum advantage of the parents’ transfer tax exemptions in order to minimize potential estate and inheritance taxes as trust assets pass from one generation to the next.
Trusts can be designed in many ways to provide a great deal of flexibility for the changing needs of a family. For example, incentive trusts can be structured so that whatever the children earn on their own, the trust will match each year. Incentive trusts can also encourage and reward other types of responsible behavior important to parents, including graduating from college, getting married, having a baby, etc.
Many parents opt for a trust structure which appoint trustees who can make discretionary payments of principal to beneficiaries on an as-needed basis for the health, education, maintenance and support of selected beneficiaries. Those trusts can also protect the grantor’s children (and more remote descendants) from creditors and ex-spouses – in perpetuity, depending upon state law. Still other clients prefer a staggered distribution model where beneficiaries receive defined payouts of principal from their trust as they reach certain ages (i.e., one-third at ages 25, 30 and 35). All of these trust and estate planning models allow beneficiaries to enjoy wealth, but not in an unfettered manner, as well as protect assets from the potential claims of people outside the immediate family unit, ensuring a blood-line distribution.
For more information regarding the importance of trusts and other estate planning matters, please e-mail your requests to Phil Levin, or call Phil at (610) 977-2443.
To learn more about the trust and estate planning services which The Levin Law Firm provides to our clients, please visit our website.
All the best to you and your family for a Happy, Healthy, and Prosperous New Year!
Estate planning often includes provisions about how clients can leave a lasting legacy beyond the assets which they own on their balance sheet.
A client’s estate is made up of everything they own, which includes personal possessions as well as homes, cars, securities, bank accounts, life insurance, retirement plan accounts, and more.For many clients, their legacy and “wealth” comprises much more than just their financial assets. It often includes memories, stories, and non-physical assets that make up their personal legacy and which clients want to convey to their friends and loved ones.
Of course, the traditional purpose of estate planning is to give clients control over how their estate is distributed to the people and/or charitable organizations they care about, and to preserve their legacy for the next generation and beyond.
Having an up-to-date estate plan is also vital for a number of other important reasons, including:
- Providing health-care instructions in the event of an illness, injury, or incapacity
- Appointing one or more people to manage financial affairs during life, and in the event of death, if the client is unable to do so
- Naming a personal guardian and financial guardian for children who are minors
- Providing for children, or other family members, who have special needs in a way that will not reduce government benefits
- Protecting loved ones from the “incidents of life”, including potential creditors, predators, and divorcing spouses
- Providing protection for assets, both during life and upon death
- Making sure the right property, passes to the right person, at the proper time
- Minimizing taxes and estate settlement expenses
- Planning for potential long-term care costs
If you have any questions about how a comprehensive estate plan can protect your clients and their families, or if there is a specific topic which you would like us to cover in future editions of Estate Planning Matters, just hit reply and let us know.
If you or your clients do not have a comprehensive estate plan – or have one that needs to be reviewed and updated – make 2014 the year to get this done by calling The Levin Law Firm to arrange a meeting.
