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Financial Planning > Trusts and Estates > Estate Planning

What’s the point of updating your client’s estate plan?

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Estate planning has less to do with taxes and more to do with making sure your clients wishes are known and honored.

If they have an existing estate plan yet have not incorporated life changes into their plan, it may be time to visit with your clients to discuss changes such as:

    • Family changes
    • Business changes
    • Needs and interest change

If any life events have occurred since they created their estate plan, incorporating those changes has a direct impact on the effectiveness of their estate plan and how that plan will carry out their wishes for and with their heirs.

If life events have occurred it may be important to review things like:

    • Existing plans with formulas tied to estate tax exclusion amount
    • Are they giving too much to the kids?
    • Are they giving too much to the spouse?
    • Are they giving enough to charity?

Once you identify issues in their current estate plan you may want to council them on issues like:

    • Is their plan flexible enough for the surviving spouse
    • Would a disclaimer trust plan better allow a surviving spouse to decide if and how to fund trusts at the death of the first spouse
    • Powers of appointment allow surviving spouse to change disposition of trusts established at first spouse’s death
    • What trust protectors should be used

If gifting will be part of their estate plan they might want to make sure their estate plan is up to date on issues like:

    • FLPs and the accompanying discounts
    • Annual gift exemption

There are other reasons to have an up-to-date estate plan with a trust provision. When you’re with clients, ask this question: Would their surviving spouse and/or beneficiaries of their estate benefit from:

    • Trust planning at the death of the first spouse using a Credit Shelter Trust/Martial Trust vs the “I love them” will
    • Trusts protect assets from:
      1. Future “new” spouse
      2. Creditors of surviving spouse
      3. Changes in tax law
    • Trusts for kids:
      1. Protects assets from kids’ creditors
      2. Protects assets from kids’ soon to be ex-spouse
      3. Protects assets from kids’ dependencies and addictions
      4. Allows for special needs planning for kids and grandkids
    • Special Needs Trust:
      1. Number of people eligible for medical assistance programs continues to climb
      2. If assets are held by the individual, they must be spent down before eligible for assistance
      3. If assets are held in a Special Needs Trust, trust assets are exempt and protected
    • State Estate Taxes – some states have “de-coupled “ from the federal estate tax
    • Business Planning issues to be addressed regarding succession planning:
      1. Will the kids take over?
      2. Do they want to take over?
      3. Are they capable of taking over?
      4. Lock up key employees
    • May include buy-sell agreements in estate plan:
      1. Triggering events: death, disability, retirement, burn out, insolvency
      2. How to determine price:
        1. Valuation
        2. Formula
        3. Agreed upon value
      3. Funding issues: insurance, payments over time, etc.

The best way to predict the future is to create it. So, create a plan for their future, update their estate plan on a regular basis, and seek the advice and council of their trusted advisor and their attorney.