Mark A. Bregman, Estates and Trusts Lawyer


The Continuing Series on the Complete Guide to estate Planning – Part 4 – Wealth Transition

In this fourth installment, I describe how to approach wealth transition planning and why you need to overcome fear of mortality, lack of time, and all the other good excuses to complete your planning now.

This is the last of the introductory posts and next week, I will describe planning for incapacity in greater detail.

I divide wealth transition planning into 2 categories, estate tax planning for large estates and family issues for estates of any size.

Estate Tax Planning.  Through the end of 2012, estates up to $5 million will pass to the next generation without being subject to federal estate taxes.  Estates of married couples who follow appropriate administrative strategies after the first death may double the exempt amount up to $10 million.  The exemption can be used in any combination of gift or estate tax exemption to accommodate lifetime or post-mortem planning.  There is no death tax levied by the state of Arizona.

However, estates of decedents dying after 12/31/2012 will be subject to federal estate tax after a $1 million exemption and advanced planning is necessary if you want to reduce the amount of money paid in federal estate taxes.

Judge Learned Hand said “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury.  There is not even a patriotic duty to increase one’s taxes.  Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible.  Everyone
does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

There are many strategies to reduce the incidence of estate taxes, beginning with preserving the exemption of each spouse and escalating through significantly more involved strategies using outright gifts, family limited partnerships, irrevocable trusts and charitable giving, all of which have in common the giving up control over some of your money in order to preserve more of it for your descendants.  Estate tax planning is unique to each individual family and depends on the nature and value of your assets.  In conjunction with the best lawyers in their fields, I tailor advanced plans for each client who intend to reduce their estate taxes.

Family Estate Planning involves more than listing your children.  It involves a careful examination of the relationships between your spouse, your children and other people dependent upon you for support and the development of a plan that will be currently effective and also last for the lifetime of one or more generations to follow.  Accurately identifying family dynamics and carefully choosing who will be in charge of and how your wealth will be used, even for modest estates, is an important process that goes beyond simply choosing who will serve as trustee for your children until they reach a certain age.  Failing to adequately consider family dynamics and incorporating the impact of life insurance and qualified plan beneficiary designations into your overall planning often leads to destructive disagreements among your loved ones and can be avoided with a thoughtful examination and periodic re-examination of such issues.  I guide my clients through that process, suggesting potential pitfalls and possible solutions.

Every estate plan should include both estate taxes, family dynamics, and the proper titling of accounts and beneficiary designations.  All such planning should be coordinated with your financial advisor to assure you have taken care of yourself first.

Next time I will describe incapacity planning in greater detail.

If I can help you or anyone you know, I welcome you call.