By: Douglas L. Kaune, Esq. dkaune@utbf.com or 610 933 8069
With all of the discussion of the uncertain landscape of the federal estate tax system, I would like to remind clients and friends that that
Douglas L. Kaune
you should still start or revise your estate plans as necessary. The federal estate tax issue applies to such a small portion of the population that I do not want that tax consideration to paralyze the masses and thereby prevent them from executing proper plans. There are many important estate planning issues that must be addressed that have nothing to do with the federal estate tax. Click here to read this recent news article that outlines many no-tax related planning concerns.
If you are a parent with minor children you definitely need to have a will with trusts for the benefit of each of your children. These trusts are important regardless of the tax considerations. The trusts for minors allow you to name a trustee to monitor the investments and insure that the trust assets are properly spent on important things such as college, daily living, rent, house purchase etc. The assets are available to be spent, just at the discretion of a trustee who provides your children necessary guidance.
If you are a parent with adult children, you should consider trust planning to protect the inheritance you leave your children from divorce, creditors and lawsuits. This trust planning is becoming evermore popular as clients realize that divorce after inheritance is as great a risk to an inheritance as tax. Parents want to protect their adult children from losing one-half or more of the inheritance to a divorcing spouse. This trust planning that we refer to as Beneficiary Controlled Trusts can be very user friendly for the children. Each child is usually the family trustee of his or her own trust. The child will manage his own trust as business entity, but will have broad powers to use the assets in the trust. The key to this planning is that the child never takes actual ownership and therefore never co-mingles the inheritance with marital assets and never opens them up to other potential creditors or law suits. This can be amazingly powerful planning for reasons that have nothing to do with taxation.
Wills and trusts allow you to structure the appropriate distribution plan for your assets. You might have a disabled child that needs a Special Needs Trust or you might have a particular child that needs a greater share of the estate for various reasons. These documents will allow you to name Executors to handle your estate, trustees to help your children and guardians to take care of your children. You need to document your intentions to make your plan happen. Absent this documentation, you are letting other people make the decisions for you and these might be incorrect and detrimental.
Also, in the Elder Law section of the practice, we know that addressing the growing concern that parents or loved ones will need nursing home care is of paramount importance. For many clients, years spent in a nursing care setting can cause a far greater reduction in their estate value than any tax. Advanced planning can serve to reduce or eliminate the risk of loss and increase the likelihood of early Medicaid qualification. This Elder Law Planning is time sensitive and requires forethought. You should not wait until the nursing home care is needed. If you wait too long, many of the Medicaid planning strategies could be lost.
Check out this article on the Unruh, Turner, Burke & Frees, Website for some more in depth review of the Beneficiary Controlled Trust.
Doug is a member of the National Academy of Elder Law Attorneys (NAELA) and a Partner with Unruh, Turner, Burke & Frees, P.C. which is a full service law firm with offices located in Malvern, Phoenixville and West Chester, PA and also serving Philadelphia and other towns in Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).
