You are a busy professional or business executive who must serve his clients or build his business. However, you also have a family and significant personal assets that require your attention. How can you find the time to both grow your business and ensure that your assets are not devoured by estate taxes upon your death? Selecting an experienced trust and estate planning attorney is critical.
Federal and State estate taxes can erode as much as 70 percent of your estate leaving your loved ones with significantly less money than you had anticipated. A credit shelter or tax savings trust, included in your Will and that of your spouse, can eliminate or reduce these devastating taxes. In order for a tax savings trust to work, assets owned by you and your spouse must be titled so that each owns approximately the same amount of assets in their own name. Upon the death of the first spouse, assets are transferred to the trust. The assets then pass tax free to your children upon the death of your spouse.
For some individuals, the use of an irrevocable life insurance trust is also a key component to reduce the bite of death taxes. This trust will become the owner of a life insurance contract and will receive the death benefit upon the death of the surviving spouse in a marriage. The proceeds from the policy will be excluded from the estate of the surviving spouse, thereby eliminating or reducing the estate tax to be paid. Furthermore, the remaining monies in the trust can then be distributed tax free to your children or other chosen beneficiaries.
In addition to preserving your financial estate, protecting your children in the event you and your spouse die before they are eighteen (18) is a fundamental goal of any successful estate plan. The Will should designate an individual known as a guardian who will assume parenting responsibilities. This person should share your child rearing philosophy and be mentally and physically able to perform this difficult and challenging task. Naming an elderly parent as guardian is not recommended. Many individuals will name a trusted brother or sister and their spouse. It is not a good idea to name a brother-in-law or sister-in-law to serve with your sibling as a co-guardian. Who is to say if that in-law will remain married to your sibling? You do not want an estranged in-law with a legal claim to raise your children.
Careful consideration should also be given to the choice of an executor for your estate. An executor should be a responsible and organized person. This individual could be a spouse, adult child or trusted professional. An executor will work with an attorney to probate the Will and to value the assets of the decedent as of the date of death. Thereafter, estate debts and taxes will be paid by the executor with the balance of the estate being distributed to the beneficiaries in accordance with the terms of his Will.
It is important to realize that without a properly prepared Will the State and Federal government will receive more of your estate than you may believe. Moreover, without a Will the beneficiaries of the estate you have worked a lifetime to accumulate will be decided by the State and not you. In many instances, these State mandated beneficiaries are not the same people you would have named in a Will.
In conclusion, a properly prepared Last Will and Testament with the appropriate tax savings trust and the proper selection of an executor and guardian will preserve your assets and provide the peace of mind you and your loved ones deserve.
Nicholas Giuditta is a trusts and estates lawyer in Cranford,New Jersey. He prepares estate plans for high net worth individuals that protect their loved ones and preserve their assets. Find out how your family can benefit by visiting giudittalaw.com.