Wills, Trusts & Estate Planning
Drafting a will, trust or estate planning document is an activity fraught with traps for the unwary. It is a place where the intricacies of the tax code intersect with the arcana of ancient legal forms, and precision is necessary to make sure that the client’s intentions are not frustrated by sloppy execution. Moreover, the documents created are not meant to address a particular moment in time, but rather to anticipate the needs of the client and his or her family now, as the client ages and the children mature, and once the wealth is ready to be passed to the next generation. Estate planning is thus a process that must anticipate change, and embrace financial needs, business plans and family dynamics projected into the future and tweaked over time.
Basic Documents
The primary documents that everyone — regardless of age, health or wealth — should have at hand at all times are:
- a durable power of attorney — so that a trusted loved one (and not a stranger) can make decisions and attend to your affairs if you suddenly become incapacitated;
- a health care directive — instructing your family members as to your wishes regarding medical treatment; and
- a valid will directing the distribution of your assets.
Mr. Berck can assist clients with these basic documents; however, these documents are sufficient merely to prevent the state from taking control of the client’s assets and distributing them according to the dictates of the law; more thorough estate planning, as described below, is often needed to accomplish a distribution that meets all of the client’s wishes and tax minimization.
Estate Planning
It may be helpful to think of estate planning in terms of different time frames:
- Near Term: Are immediate steps necessary to avoid excess taxes on currently-held assets or to guard against potential claims from creditors? Is there a need to set aside funds for the education of one’s children?
- Medium Term: What steps need to be taken to increase the size of the estate between now and retirement? What vehicles should be established to legally shelter assets from current and future taxes? What instruments should be considered for investment to yield income in the retirement years?
- Long Term: Will there be any income from retirement funds? How can existing assets be monetized in a tax-efficient way? What provisions are to be made for loved ones? How can estate taxes be minimized?
Jonathan S. Berck employs a multistep approach to the estate planning process: (1) an in-depth analysis of the client’s current assets and expected future cash flows; (2) an assessment of existing business and corporate structures; (3) a discussion of cash needs and distribution goals; followed by (4) formulation of a plan to protect assets, provide for retirement and properly structure distributions to the client’s intended beneficiaries, all while taking advantage of available legitimate tools for minimizing tax obligations. There is no standard template; all plans must be individually tailored, monitored and adjusted as circumstances and changes in applicable regulations dictate.
Depending on the client’s facts and circumstances, some or all of the following may be used:
- lifetime distributions to maximize tax benefits;
- removal of assets from the estate for placement in other vehicles;
- asset protection trusts;
- family trusts, offices or corporations;
- charitable trusts;
- trusts for the benefit of children and/or other descendants;
- life insurance, annuities and life settlements;
- arrangements for decision-making in the event of disability (powers of attorney, health-care directives, living trusts, “living wills”, etc.);
In many instances, the client will already have financial advisors, accountants and other consultants, and Mr. Berck will happily work with them as a team to minimize any duplication of effort or expense. Clients should also regularly revisit the estate plan to make adjustments as needs change.
