Taxes, taxes, taxes. It seems like they never end. First of all, when we earn income, we must pay taxes on our income. OK, that’s fair. If we are fortunate enough to save money after paying our expenses, as we accumulate assets, we have to pay taxes on the money we make on our investments as we receive interest, dividends and capital gains. And finally, if we are savvy and fortunate enough to have accumulated substantial wealth, we have to pay a “bonus” when we “check out”.  Now that certainly doesn’t seem fair, but unfortunately, that's the way it works. We are referring to estate taxes that depending on the state in which you reside may be payable at both the Federal and state level.

There are several reasons why estate planning is vitally important. You do not have to be wealthy to plan your estate. Many individuals ignore their estate planning, thinking that they are not wealthy enough to have an estate plan. The following is a list of some of the reasons why you should have an estate plan:

• In absence of a Will, the state in which you reside determines who receives your assets in the event of your demise.



• You decide who receives your assets and what percentages.



• If you have minor children, you, and not the state, select a guardian for your children.



• You are able to name trustees, if necessary, to assist family members or other beneficiaries in managing their assets.



• If all your assets (with the exception of retirement plan assets) are titled in joint name, you may be unnecessarily subject to estate taxes.



• If you have children from a previous marriage, you can make certain that you do not “disinherit” your children or spouse/partner.



• If you have a child, or other beneficiary, who has special needs, you can provide for them without jeopardizing any public assistance they may be receiving.



• If you have a sizable amount of assets in retirement plans, i.e., 401(k), profit sharing plans, IRA Rollovers, it is imperative that you review your estate planning since your Will does not determine who inherits these assets.



• If you have charitable intentions, you will need a Will to make special bequests to charity.



• If you have a business, you can develop a business succession plan.



• If you have a business, you can address issues such as “estate equalization” if one child is active in the business while others are not



• If you have a taxable estate, you can develop strategies to minimize Federal Estate Taxes



• If you have a taxable estate, you can make sure that your estate has sufficient liquidity to pay the taxes so that the family business and/or real estate does not have to be sold

The estate-planning team at Lane Bridgers Schill can be an invaluable resource in helping you plan your estate. The first step is to inventory your assets and liabilities and develop a personal financial statement to determine your net worth. In developing the financial statement, we will also identify how each asset is titled, i.e., individual name or joint tenants with rights of survivorship, tenants-in-common, etc.  In addition to determining the value of your estate and the manner in which the assets are titled, we will also review the beneficiary designations of your IRAs, life insurance, annuities, and 401(k) plans and any other assets that have a “designated beneficiary” to make sure that they are consistent with your dispositive intentions. Many people do not realize that their Will does not determine the beneficiaries of these assets, unless you actually designate your estate as a beneficiary, which in itself, is generally not recommended.

The next step in the estate planning process, once we have clearly defined the value of your estate, how assets are titled, and who you have designated as beneficiary of retirement plans, life insurance, annuities, etc., is to establish your objectives in terms of what is most important to you and your family. How would you like your assets divided? Is it important that you preserve as much of your estate as possible for children and grandchildren? Are there any “special circumstances” that may require assets to be placed in trust? If Federal Estate Taxes are inevitable, is there sufficient liquidity to pay the tax?

Once we have established your planning objectives, the next step is to present planning alternatives that based on our understanding of your current resources, planning objectives and income needs will help you to meet your objectives.  Finally, after some fine-tuning of our recommendations, we can either work with your attorney, or refer you to an estate-planning attorney with whom we have worked, and assist them with the implementation of your estate plan.

In exploring various estate planning strategies we take into consideration, first and foremost, the income needs of our client. Assuming income needs are not compromised, we consider gifting strategies, various types of trusts and partnerships, including but not limited to Qualified Personal Residence Trusts (QPRT), grantor retained trusts (GRATs & GRUTs), Family Limited Partnerships (FLPs) and charitable trusts (CRATs and CRUTs). We seek opportunities to take advantage of such concepts as discounting and leverage. We seek creative funding mechanisms to fund the purchase of life insurance owned by either an Irrevocable Life Insurance Trust, or adult children, to provide liquidity for payment of taxes, to replace assets that are earmarked for charity, or simply to create a legacy for children or grandchildren.

Not to be forgotten or ignored, is IRA Distribution Planning, which is extremely important, especially when you consider that your Will does not dispose of IRA assets, and often times an IRA will represent a disproportionate amount of the estate. If you find that your IRA represents a disproportionate amount of your estate, Thomas A. Lane, Jr., ChFC, CFP™, is a noted expert in the area of IRA Distribution Planning. He has been trained by the nationally acclaimed expert in IRA Distribution Planning, Edward Slott, CPA. Mr. Lane has been chosen to be a member of Mr. Slott's “IRA Elite Advisor Group”.

Whether you are an executive, private business owner, professional or a retired individual, you are most likely a candidate for an estate planning review and analysis. If you are interested in learning how we can help you with your estate planning, please email us at tlane@lanebridgers.com or give us a call at (800) 453-8699.