Estate Planning Library

“Alaska Community Property Trusts: The Basics”

One of the primary benefits of an Alaska Community Property Trust is that, at the death of the first spouse to die, both spouse’s interests in the community property receive a full basis adjustment.  This means that the tax basis of the property is raised to match the value of the property on the date of the decedent’s death. – Read more…

“Asset Protection”
In general, asset protection planning attempts to organize the ownership and location of a client’s property in such a manner as to make it as difficult as possible for a creditor to acquire the property in satisfaction of a judgment against the client. It must be remembered, that the techniques discussed following are not necessarily 100% successful, but “reasonable” settlements are frequently obtained. The particular techniques that planners use vary, but the “general techniques” are… – Read More…

“Balancing Benefits to the Children with a Common Trust”
Typically, a common trust benefits clients who are planning for children or grandchildren who are minors. The reason for the creation of a common trust is, much like its name, family assets are generally made available to whatever child needs them. If one child is ill, all assets owned by the trust will cover the ill child’s health care costs. It is not as though the available assets will simply be divided by the number of children and the ill child receives only that child’s fractional share. – Read More…

“Banned Weapons Under Connecticut’s ‘Act Concerning Gun Violence and Children’s Safety’ “ 

Please review the lists included below.  If you own any of the guns or items listed below please contact us.  All of these are banned weapons under Connecticut’s “Act Concerning Gun Violence and Children’s Safety” (the Act).  They must be registered and violations of the Act can result in being charged with a Felony.  The penalties include prison, significant fines and or probation. – Read More…

“Ensuring the Success of Deathbed Gifts”
While perhaps indelicate, the term Death Bed Gifts refers to gifts made when a client is virtually certain to die within a few days or perhaps hours. Death bed gifts are a very effective method to reduce the taxable estate of the terminal client. Generally, the gifts are intended to utilize the client’s annual tax free gift of $10,000 indexed for inflation, to any person, without a limit to the number of persons. – Read More…

“Estate Adminstration Costs at the Death of the First Spouse”
When a Trustmaker of a living trust dies, the Internal Revenue Service requires the trustee of the trust to treat the formerly revocable trust as a new taxpayer. The Administrative Trust is easiest to understand if you consider it to be an accounting mechanism to provide information for tax returns and other reports to the IRS and others. The Administrative Trust is the entity where all of the financial and tax activity occurs prior to the actual transfer of property to the Family Trust, the Marital Trust or the surviving spouse or charity and others, as the decedent’s estate plan provided. It is necessary for the Administrative Trust to request a taxpayer ID number and file federal, and in some states, state income tax returns. The passing of a person is a very important event and government entities want a clear trail of the financial activity that occurs because of that death. – Read More…

“Family Limited Partnerships”
Family Limited Partnerships, or FLPs, are frequently used by:

  • Clients who operate a business as a sole proprietorship
  • Clients who operate their business in the form of a general partnership
  • Clients who want to make gifts of property to their children but still control the management or investment decisions affecting the property
  • Clients with taxable estates
  • Clients who want some form of asset protection
  • Clients who want to protect life insurance proceeds from estate tax, but want more flexibility than in an irrevocable life insurance trust

Read More…

Generation Skipping Transfer Tax Planning
Generation skipping transfer tax planning is used by:

  • Clients who want to provide asset protection for their heirs.
  • Clients who want to provide professional financial management for the bequests to their heirs.
  • Clients who want to avoid the imposition of an estate tax at each successive generation.

Read More…

“Gift Tax Planning for the Non-Citizen Spouse”
I think it is better if I explain the “general” rules for citizen spouses first. The goal of the estate and gift taxes (the estate taxation of non-citizen spouses is covered in Number 21 of the Estate Planning Library) is to impose a tax at each generation, but not to financially burden surviving spouses by imposing an estate tax at the death of the first spouse to die. Typically, one spouse dies and leaves any property that would be subject to estate taxes to the surviving spouse and there are no taxes imposed on the transfer to the surviving spouse because of the unlimited marital deduction. When the surviving spouse dies, his or her estate is subjected to estate taxes, if large enough. You can see how there is a certain symmetry to the arrangement. Spouses are protected but the estate of the last to die is subjected to Federal estate taxes. – Read More…

“Irrevocable Life Insurance Trusts”
1. What client might need this technique?
The estate planner consults with the client to help them decide on the features and benefits of an ILIT that best serves the client’s family’s best interests. Actually, any client that owns a life insurance policy can benefit from an irrevocable life insurance trust (ILIT). Some specific types are:

  • Clients who will have taxable estates due to the life insurance proceeds.
  • Clients who want to provide asset protection for the insurance proceeds for their families and descendants.
  • Clients who want to provide financial management for the insurance proceeds for their family and descendants.

Read More…

“Legal Challenges to your Estate Plan”
Why would someone challenge the design of my estate plan?
It is not a frequent occurrence, although today’s generations of children are more litigious than in the past. Probably too many lawyers looking for work. Seriously though, there are circumstances that can occur wherein a legal challenge to your estate plan is more predictable than others. – Read More…

“Legacy Trust”
A Legacy Trust is an estate or gift tax planning technique where parents leave property to their children in a trust rather than outright. As the name implies, the child- beneficiary is the trustee of the trust. Thus, the Legacy Trust. – Read More…

“Making Gifts for Children or Grandchildren”
There is actually a fairly limited range of methods to make gifts to minors. I will discuss each of the main techniques and list their benefits and negative aspects, if any. Since this Brochure concerns significant gifts, we exclude gifts directly to the minor as a possibility. It is important to remember that the primary estate and gift tax concern with gifts to minors is making sure the gifts qualify for the annual $11,000 gift tax exclusion so that the donor’s tax exempt amount is not wasted. The most frequently used techniques that qualify for the exclusion are… – Read More…

“Medicaid Planning with the Irrevocable Five Year Look Back Trust”
First, let’s look at some of the Medicaid rules that come into play here. Since we are using an irrevocable trust, to protect the clients, which we will discuss later, we need to discuss the “5 year look back” rules under Medicaid. Let’s assume that clients realize they are going to need long term care in 6 months. It would be nice if they could simply give all of their property to their children and then apply for Medicaid. – Read More…

“Medicaid Planning: Preventing Your Surviving Spouse from Losing Medicaid Eligibility”
Many Medicaid recipients living in nursing homes have spouses who are able to continue living at home (“Community Spouses”). The nursing home spouse’s Medicaid eligibility can be affected if the Community Spouse passes away first. There are several ways a Community Spouse can plan to protect the Medicaid eligibility of a spouse in a nursing home. – Read More…

“Non Tax Reasons to Estate Plan”
Surprisingly, many, perhaps most small to moderate estates, are motivated more by personal, inter-family reasons than tax reasons. Even if the original interest of the client is saving their children the costs of estate taxes, the engagement can frequently turn into a design based on non-tax motivations. We believe that planning should always have as its focal point, doing what is right for the family. First the client and then loved ones, and not just tax avoidance. – Read More…

“Opportunity Shifting”
Opportunity shifting is used primarily by:

  • Clients who are successful entrepreneurs or who have been successful in earlier ventures and want to avoid increasing their estates with new ventures.
  • Clients who are economically comfortable with their assets and want to avoid estate taxes on increases in the value of their estates due to appreciation in the value of what they own.
  • Clients who are beginning a new business or investment venture and want their children or grandchildren to benefit from the success of the venture or investments.

Read More…

“Private Foundations”
A private foundation is a specially designed trust or corporation that is exempt from income taxes and for which there is an estate or gift tax deduction for property transferred to it. As an example, if a decedent dies and leaves all of his or her property to that person’s private foundation, that person’s estate receives a deduction for the bequest and no estate taxes are payable. From a technical standpoint, documents are completed and filed with the IRS and state authorities to obtain their approval that the entity is tax exempt and qualifies as a private foundation.

Read More…

“Protecting the Inheritance of a Special Needs Child”
In the purest sense, a Special Needs Trust is generally used for children, or other family member of a client, that may or already does, qualify for need based government benefits. As examples:

  • A child has a severe physical or mental illness and qualifies for Medicaid or SSI benefits that would be lost if the child received an inheritance.
  • A parent who is receiving Medicaid benefits that would be lost if the children provided in their revocable trusts that their parents, if living at the death of the surviving spouse, receive an inheritance.
  • An heir that needs protecting against an unforeseen event that could make them ineligible for need based government benefits. Protecting against unforeseen events that would make an heir ineligible for need based government benefits.

Read More…

“Some of the Road Blocks to Funding your Revocable Living Trust to Success”
I have been asked that question many times over the years, and I originally struggled with formulating a simple explanation. Finally, one of my paralegals was having difficulty with a bank (more about that later) placing a client’s residence in the name of the client’s living trust. She said, this is as complicated, because of the and attention to detail, as the actual sale of a house. Obviously, a “light bulb went off.”

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The ‘Real’ Meaning of Long Term Health Care Insurance
1. What kind of client could use long term health care insurance?
Frankly, I recommend it to all of my clients. Statistics bear out that 50% of the aging population will require some long term health care. With those odds, and new diseases and conditions being discovered every year, I feel a professional responsibility to recommend the policies to all of my clients. – Read More…

“Using the Legacy Trust”
2. Why are estate planners and their clients increasingly using Legacy Trusts?
It is easier to explain why, if we first understand that there are essentially two methods to leave property to the typical child, excluding those that are irresponsible, etc., they are:

  • Outright to the child
  • In a trust for the child where the child is a trustee

As we are assuming that there are only two methods to leave the property, we need to compare them against one another. – Read More…


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