Estate Planning

What is Estate Planning?


Estate planning is a professional approach to strategies for:

1.  Transfer of wealth and

2.  Protection of person and property.



Where do estate taxes figure in Estate Planning?


The federal law was clarified by the fiscal cliff settlement of Jan. 1, 2013. The exemption from federal gift and estate tax is now permanent at $5.1 million, indexed for inflation, or $10.2 million for a married couple. So the complicated A-B trust formulas in the traditional trusts and wills of most clients are now out the window, un-necessary and outmoded. Annual gifting limits are also pretty much off the table.


I had a trust done a few years ago, does it need changing?


Chances are that it needs updating, especially if total assets of a married couple are less than $5 million.


What other taxes affect estate planning?


Most clients are now paying attention to income taxes (cost basis of property held or to be passed on), property taxes (avoiding an increase in taxable value on transfer or death), and sometimes real estate transfer taxes.

What is Asset Protection?


Clients ask about Asset Protection. My first questions are: (1) Protection from Whom? Present or future creditors? The government? Spouse or children? (2) Protection for Whom? The client? Client’s children or grandchildren? Estate planning strategies depend on the answers to these questions and each person’s particular circumstances and mind set.


What is the purpose of my Trust?


For many years Trusts were recommended for 3 purposes: 1. Minimizing estate taxes 2. Avoiding probate 3. A mechanism for managing property in the event of incapacity. With the changes in the tax laws, one of the principal purposes for most clients is now gone. At a minimum, most trusts of married clients can now be simplified. For most people the second purposes are still valid.

Does a Will avoid probate?


No, this is a common misconception. Your Will directs how you want property held in your own name at death to be disposed of. That property is called the “probate estate.” It will not apply to property held jointly, with a spouse or child, for example. It does not apply to your IRA or life insurance, in most cases, because that property goes to the beneficiary outside the will. Your Will specifies who will manage your Probate Estate and who can sue for wrongful death, injury, or money damages after your death.

Is this as complicated as it sounds?


Yes, it is a lot more complicated than LegalZoom would want you to believe. It is a lot more than filling in the blanks. Estate planning is unique to each person, family, circumstances, health and goals. Married couples with assets over $10 million are still interested in intricate tax planning. So are singles with assets over $5 million. Estate planning really is about Peace of Mind.

© 2014 James R. Modrall, III


  • w-facebook