Advanced Estate Planning

In San Diego, advanced estate planning can consist of many different strategies. These can include revocably living trusts, special needs trusts, grandchildren trusts, estate tax planning, business succession planning, asset protection planning, creating a family limited partnership, creating a charitable foundation and charitable trusts among others.

Revocable living trusts are the foundation for many advanced estate planning strategies and can take many forms and are also used for basis estate planning. Revocable living trusts are designed to place the title of assets in the name of the revocable living trust and not the living person’s name for the purpose of avoiding probate fees and costs, giving privacy in the distribution and also expediting the distribution of assets without court proceedings. Some revocable living trusts also have trusts within them and some are commonly called “A/B” trusts.

Special needs trusts are designed for those who have special needs. This can include a physical or mental disability in which a person other than themselves have control and manage the estate for this benefit. In this way, a special needs person is not taken advantage of or wastes their estate assets because they are not able to make informed and intelligent decisions regarding the estate assets. This is also called a supplemental needs trust and be used to not have assets counted for qualification purposes for certain government benefits such as MediCal, Supplemental Security Income [SSI], subsidized housing and vocational rehabilitation among others.

Grandchildren trusts are used for minors to insure that they do not spend their estate distribution unwisely due to their age. These grandchildren trusts can be designed so that distributions are made at certain ages such as 25% at age 18, 25% at age 21, 25% at age 25 and the remaining 25% at age 30 or can be made so that the distributions are used for specific purposes such as education, housing, medical, down payment on home or others. It is crucial, in these grandchildren trusts, to have a trustee who will follow your wishes and act in the best interests of the grandchildren. It is common to have a trusted relative or friend and some prefer using a commercial entity such as a professional trustee at a bank. There can also be provisions for a co trustee as necessary.

Estate tax planning is a very complex issue. Some of the issues which are important include whether the estate will pay the tax, how will the value of the estate be determined upon death, how large an estate is necessary before estate tax implications need to be considered, when are federal estate taxes due if estate taxes are owed, whether life insurance is subject to the federal estate tax, will the beneficiaries have to pay estate taxes or go through probate, will “custodial” or minor accounts be subject to the estate tax and included in the estate for estate tax purposes and many other issues.

Business succession planning can be part of any advanced estate plan. Business succession planning deals with who will run the business or company when you are gone. Many business’ have significant value and are part of the estate. No one wants to think about their death however all want to make sure their years of effort and sacrifice for their business or company is continued on past their death. Legal considerations can include contracts and legal documents that specifically address this issue of business succession planning. These can also include buy-sell agreements as well as including the business valuations and protocols and obtaining appraisers for valuation purposes as needed.

Asset protection planning is on a “case by case” basis and is very complicated. Unfortunately, some attorneys [and others] have advised clients to enter into asset protection which is not appropriate. While this article gives no opinion on individual cases, certain “off shore” strategies have been found to be not within the laws of the United States and have been discouraged. Asset protection can include both advanced and basis levels. One of the best asset protection strategies can include the formation of a corporation which can protect personal assets from creditors however the formalities must be strictly observed or the benefits and protection can be void.

Family limited partnerships are an advanced estate planning strategy. These are used within families to transfer business interests during life to other family members and are, again, on a “case by case basis”.

Charitable foundations and charitable trusts are also advanced estate planning strategies. Giving to a charity may be a goal of many people and can be an excellent strategy and is also on a “case by case” basis.

Please feel free to contact us to discuss your advanced estate planning strategies.