Estate planning is the preparing of legal documents to carry out your testamentary intent. Estate planning does not just take into account the high net worth individual who is primarily concerned about estate taxes, but rather planning for everyone’s testamentary intent. Testamentary intent is what you want to happen when you die. Notwithstanding, the general definition estate planning can include sophisticated gifting options to reduce one’s taxable estate and avoid or diminish federal and state estate taxes.
Way back in August of 2008 I wrote a Post about Simple Wills. As you may recall (or just read when you clicked the link) a simple will is usually built as follows:
The problem with Simple Wills (again, as I indicated in 2008) is that don’t usually take care of certain items. Specifically, I mentioned:
- Special Needs Trusts – protecting those heirs that are currently receiving gov’t assistance (I will do a whole post unto itself on this);
- Advanced Spendthrift protection – want to protect this money from creditors and/or divorce for multi-generations, don’t use a simple will;
- Generation Skipping Tax Issues;
- Business transfers – (Qualified Sub-chapter S Trusts or Electing Small Business Trusts)…for all those small business owners;
- Specific bequests you may have
See that bolded print! Well, in “Deciding if Your Kid is Trustworthy” author Stacy L. Bradford points out,
Even middle-class folks can benefit from trusts when it comes to estate planning. That’s because children under the age of 18 can’t directly inherit more than a small amount of money. If you have more than that to leave to your minor child and make no provisions in your will, a court will appoint a property guardian to manage your child’s assets until he reaches 18 or 21, depending on the state.
But what happens at 18 or 21? Think long and hard could you inherit even the “nominal” sum of $100,000 at those ages?
Spendthrift Protection is What You Want!
We can define spendthrift protection as the protection of the majority of trust principal from creditors (including marital equitable distribution, i.e. divorce). In the great State of New York, trusts generally are assumed to have this protection unless otherwise stated….and who would state it! I have never seen a $50 buck will but I can assume spendthrift trust protection is not in there!
Your Testamentary Intent is the Most Important Thing
Since your intent upon your death should be what controls, know your options you can do this by:
- Subscribing to this blog
- Checking out my blogroll
- Utilizing Google
- Talk to a local attorney