There is no denying the fact that estate planning has a very intense financial side to it. This is not necessarily because you want to try to find a way to squeeze every penny out of a dollar, but because you want to keep what you have earned as you pass it along to your loved ones after your death.

When you examine the paradigm objectively the tax code seems to proceed from the standpoint that achieving the American dream through hard work and smart investing is going to come with a significant penalty. So you really have no choice but to take estate planning seriously if you don’t want to lose a very significant portion of your legacy in the transfer.

The good news is that the creative inspiration that the tax laws provide can sometimes result in the implementation of strategies that are beneficial to charitable organizations. One estate planning tool that can be a win-win across the board is the charitable remainder trust.

With these vehicles you fund the trust, and if you can, it is best to use appreciated securities because this contribution and future earnings will not be subject to capital gains taxes. You appoint a trustee which is usually going to be a bank or trust company. However, you may be able to appoint yourself if you want to, and you as the donor can also be the beneficiary.

Assuming you are the beneficiary, you must receive income of at least 5% and no more than 50% of the value of the trust’s assets annually. The charity of your choice ultimately receives the remainder of the trust after you pass away or at the end of the trust term, and this amount must be at least 10% of the original contribution.

In addition to the capital gains tax advantage, you reduce the taxable value of your estate by the value of the contribution into the trust. Plus the remainder value constitutes a charitable deduction for the donor upon the creation of the trust.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

We were all told back in grade school that the only stupid questions are those that are never asked. Some people understand the wisdom of this statement early on and others do not, but it is true that there is no reason to be embarrassed when you are not entirely sure about the meaning of something. Finding out the answers is always going to be the best course of action rather proceeding with assumptions that may be false. There is no reason why everyone would be an expert on everything (Cliff Clavin notwithstanding) but with this in mind let’s take a look at the estate planning instrument called the living will.

The standard will or “last will and testament” that is used as a vehicle of asset transfer is the most common estate planning tool and we are all familiar with it to one extent or another. Some people choose to create living trusts as an alternative to a will, so there are those who confuse the living will with a living trust. Both standard wills and trusts involve the transfer of assets to your loved ones, but the living will is an advance health care directive that is strictly involved with your medical preferences.

With a living will you elucidate how you feel about things like being kept alive through feeding tubes or other forms of artificial life support if you were to fall into a non-responsive or terminal condition. When you think back to the case of Terri Schiavo that played itself out in the public eye the 1990s you can see why living wills are so valuable. Terri was in a vegetative state for some eight years after suffering from cardiac arrest in 1990. Her husband finally decided that removing the feeding tubes that kept her alive would be best, but her parents did not agree and a court battle ensued.

We all have our own feelings about matters such as these and there is no inherent right or wrong. Through the execution of a living will you put all doubt to rest and make a legal statement that asserts your preferences in writing that will hold sway should you ever become unable to communicate them.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

The news about the changes to the estate tax parameters has been the talk of the estate planning community, and the fact is that the new legislation is an improvement. But it is important to keep the matter in perspective, because in the end we are still left with a 35% estate tax, and it is hard see how this federal levy is just.

To provide a basic example, suppose you decided to take your grandfather’s advice and save a little something out of each of your paychecks when you were a very young person. You watch your savings grow and continue the practice throughout your life, setting aside a percentage of each paycheck for all of your working years. At end of several decades your thrift pays off, and you find that you have accumulated quite a tidy sum.

Each of your paychecks over the years was taxed, and when you consider payroll tax as well as income tax you were left with perhaps 60% of what you actually earned. The money that you put into your savings account over all those years was part of this after-tax remainder. But when you pass away and leave your savings to your children, the transfer is subject to a 35% estate tax. And if they never touch that money and then leave it to their children, the estate tax will once again be imposed.

This is simply not acceptable to most people, and one solution is the creation of a legacy trust, which is also called a generation skipping trust or GST. With these trusts you make your grandchildren the beneficiaries rather than your children, but your children can benefit from the trust, receiving cash distributions and utilizing trust property. But since they don’t own the assets, these resources are protected from judgments against your children. When they die, your grandchildren inherit the assets in the trust, so the estate tax is only levied once but the assets pass through two generations.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

Creating a Will is an important process. If you’re like most people, you don’t realize that there are certain things that you should not include in your Will. Some things you can’t include because it’s illegal; others, it’s simply not practical. Here’s a guide identifying what you can’t include when creating a Will.

1. Any property not titled in your individual name.

2. Funeral instructions

3. Federal estate tax planning

4. Certain conditions for receiving a gift

5. Any provisions that involve illegal action

When creating a Will, keep in mind that only property in your individual name is controlled by the Will. So, your Will would include your house, bank account, and investment account so long as it’s in your name alone.

If any of these assets are in joint names with a spouse or anyone else, as is very common, your Will has no control and the asset will go to the joint owner upon your death. This is also true of assets with a beneficiary designation and transfer on death/payment on death provisions. For example, your life insurance policy, naming your daughter as the beneficiary or stocks and bonds with a transfer on death designation, are not controlled by your Will. They follow the instructions of the contract.

When creating a Will, do not include funeral instructions. This is for the simple reason that funerals and memorial services are typically planned and executed before the Will is reviewed.

When creating a Will, use a Revocable Living Trust for federal estate tax planning. While technically, a Will can incorporate tax planning, it is cumbersome. If you’re going to do that level of estate planning, use a Trust as the center of your estate plan instead of a Will.

When creating a Will, ask your estate planning attorney about any gifts made with conditions. For example, you can’t make provisions that instruct that Sally receives $5,000 only if she marries your son, Sam. These conditions are illegal.

When creating a Will, don’t include provisions encouraging illegal behavior such as “My son, Sam, shall receive my 10 acres of farmland so long as he uses the land to grow poppies for opium.”

It is common to have questions when you are creating a Will. Consult with a qualified estate planning attorney who can guide you as to what to include or not include in your Will.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

You will often hear estate planning attorneys saying that people of all ages need to have an estate plan in place. Young people may feel as though estate planning is not relevant to them because they are unlikely to pass away due to natural causes. And even if they did they have very limited assets to pass along so they feel as though the matter would just take care of itself. This is arguable, but it can be conceded that a young adult who is in college may not need to have a consultation with an estate planning lawyer occupying a prominent place on his or her to-do list.

However, once you get out of college, get married, and start a family an estate plan is a must. When someone is relying on your income you must have an income replacement vehicle in place, and this would typically be a life insurance policy. Young couples who have children have an added layer or responsibility in this regard. Accidents happen every day, and if both parents were to pass away in a traffic accident or some other type of tragedy the needs of the dependent children must be met. Minors cannot assume ownership of the insurance policy proceeds, so you need to account for this possible scenario in your estate plan. This is often done through the creation of a testamentary trust.

The word “testamentary” is derived from the word “testament” as in “last will and testament.” Actually both of these terms are interchangeable at this point, so the testamentary trust is part of a testament or will. The trust is created upon the death of the settlor, and it can contain assets that were already a part of the settlor’s estate as well as funds that were acquired as a result of the settlor’s death, like insurance policy benefits. When you are drawing up the will you name a trustee to administer the funds in behalf of the minor children beneficiaries. The trust will remain active until the children reach adulthood under terms specified in the will of the deceased parents.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you have not spent much time delving into the topic of estate planning you may just feel as though preparing the distribution of your assets after your death involves simply drawing up a will unless you are a person of extraordinary means. This is one way that it can be done, but it may not be the best way. Most people want to do whatever they can to make sure that their assets stay intact as the are being passed on to the next generation, and due to some of the powers that be you may need to take some steps to avoid asset erosion.

One of these powers is the probate court. The process of probate can consume as much as 5-7% of the value of your estate, and many people would prefer that their loved ones receive that money instead. With this in mind you may choose to pass along most of your assets through a revocable living trust rather than a will.

When you create the trust you appoint a trustee and name beneficiaries who will succeed you after your death, but while you are alive you can assume both of these roles. So you retain complete control of your assets, and since the trust is revocable you can change it or even dissolve any time if you so choose. Upon your death the successor trustee assumes the responsibility of administering the trust and your beneficiary receives distributions in accordance with your wishes as set forth in the trust agreement. This arrangement is not subject to the probate process.

Aside from the avoidance of probate a revocable living trust can protect in other ways. You can appoint a bank or trust company as the trustee and stipulate that your beneficiary is to receive only the income earned by the trust and none of the principal unless an emergency was to arise. In this way you install some safeguards to ensure the long-term viability of the trust with the best interests of your beneficiary in mind.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

There are a plethora of sometimes confusing terms tossed around when you are engaged in the process of estate planning, but the one thing that everyone is familiar with is the will. This is the basic document that is often used as a vehicle of transfer stating the manner in which you would like your assets to be distributed after your death.

In addition to this standard will there is another type of will that is currently recommended called the living will. By executing this document you state your medical preferences so that your family and your health care providers will know what type of procedures you would be willing to accept in the event of your incapacitation, and those that you would deny. The issue of whether or not you would want to be kept alive through the use of artificial means if you were in a terminal condition is usually central to a living will.

There is a third type of will that we would like to highlight here and it is not a legal instrument, but it can be a vital component to your estate plan. It is called the ethical will, and it is a personal document with which you record your moral and spiritual values and any other personal observations and/or confessions. The practice of leaving behind an ethical will dates back thousands of years and actually originated as an oral tradition.

An ethical will can be framed by your faith, and in fact ethical wills are a centuries-old part of the rabbinic tradition that has been embraced by Jewish laypeople as well. But one can use the framework to communicate personal values from any perspective. Drafting such a document can be personally cathartic to the author simultaneous to being instructive to the reader as you sincerely evaluate your ethical foundation at a time when the end of your life may be drawing near.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you are doing your inheritance planning and you recognize the fact that your estate will significantly change the lives of your heirs, you have a lot of soul searching to do. With some of your family members who are older, stable, and established you may feel confident directly passing along whatever it is that you have earmarked for them. But when you are considering the impact that a large inheritance may have on younger family members or those who have displayed certain questionable decision making traits, the matter is not quite as simple.

One estate planning tool that is commonly used by people who have these types of concerns is the incentive trust. With these trusts you name a beneficiary like you would with any trust, but you include stipulations that your heir must meet in order to receive distributions from the trust.

For example, if you had heirs that had not yet come of age, you could set up incentive trusts that lead them toward higher education. You could stipulate that regular distributions from the trust will be made as long as they stay in school. You could perhaps offer additional distributions upon graduation, and after completion of each graduate degree.

One concern that many people of means have when they are engaged in estate planning is the possibility that their heirs will never develop a work ethic should they receive a large inheritance. A possible solution would be to set up an incentive trust that makes distributions related to monies earned by the beneficiary via his or her own labors.

These are just a couple of examples, but you can create an incentive trust with any stipulations you want to as long as they are legal. If you use your imagination the possibilities are endless, and these trusts are certainly something to keep in mind when you are trying to decide how to provide for your loved ones after your passing.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When looked at from a comprehensive perspective estate planning involves financial and medical matters, but there is also a philosophical component to consider. Through the execution of these three different types of wills you can efficiently cover the gamut and let the full spectrum of your wishes be known to your loved ones.

Standard Will

When you think about estate planning the first thing that comes to mind is the will, or what was traditionally known as the “last will and testament.” This is the foundational document within which you elucidate your wishes concerning the distribution of your real and personal property after you pass away.

Living Will

You hear a lot about advance health care directives these days, and one of them that is commonly included in modern day estate plans is the living will. People are living longer than ever, and medical science is making advances each and every day. So, the technology exists to keep individuals alive through the use of artificial means when they have no hope of recovery. This is a controversial matter, and how you feel about it is a personal matter. With that in mind, you can state your wishes regarding this and any other health care eventuality that you care to address via the execution of a living will.

Ethical Will

The ethical will is a bit more esoteric than the standard will and the living will, but it is important all the same. When you pass away you are leaving behind assets, but how did you acquire them, what were your business ethics, and how would you like to see your heirs approach the inheritances that you have left to them? You can address all of these matters by drawing up an ethical will, which is a document that has been used for thousands of years to pass along spiritual and ethical values from one generation to the next.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you pass away, your estate attorney will send out copies of your Last Will and Testament to all interested parties. when your Will is filed in a court of law during probate, it will become public record, so anyone can see it, but only those your attorney deems necessary will be sent a copy.

Estate Executor

The person you name in your Will as your estate executor or personal representative will most likely be the first person to receive a copy. Your representative will use your Will to pay your final debts, follow any special instructions you leave, and pass property out to your chosen heirs.

Heirs

Anyone you name in your Will to receive an asset is considered a beneficiary. Your attorney will send a copy of your Will to every listed beneficiary. This will help each recipient understand what he or she will receive and possibly why.

Your attorney may also choose to send a copy toany heirs at law that were not included in your Will, or any beneficiaries in previous Wills, who are not included now. Your attorney may do this if a possible challenge to the Will exists. Once those not included in the Will receive a copy, they have only a short amount of time to file a challenge.

Trustee

If you have a Revocable Living Trust, you will name a successor trustee to care for your trust holdings. This trustee, assuming he or she is not the estate executor, will also get a copy of your Will. Your trustee must work with your executor to transfer all unfunded items into your Living Trust.

Accountant

It is best to have an estate accountant to assist with handling estate funds for paying debts, paying taxes and passing out financial assets to heirs. This accountant should receive a copy of the Will in order to better comprehend the financial status of the estate.

IRS and State Tax Authority

If the estate will owe federal or state taxes, then a copy of the Will must be sent to the IRS and to a state tax representative.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.