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Planning Considerations

What are the Primary Non-tax Estate Planning Considerations?

Why is It Important to Decide Which Specific Assets Are to Pass to Each Beneficiary?

Can I Leave Some or All of My Estate to Someone Other Than My Surviving Spouse?

What Are the Obstacles to Creating a Smoothly Working, Carefully Coordinated Estate Plan in Families Composed of Second Marriages?

What Are the Practical Implications of Planning for the Timing of Trust Distributions?

Can I Distribute Part of My Assets to My Children Upon My Death and the Remainder of My Assets to Them Upon My Wife’s Death?

Do I Need to Treat My Children Equally in My Estate Distribution Plan?

Can I Use the Assets in My Estate, After My Death, to Encourage My Heirs Toward Worthwhile Endeavors, Rather Than Simply Creating a Generation Without the Incentive to Accomplish Anything?

I’m Holding a Mortgage on the Home of One of My Children. What Are My Options As to What Will Happen to It Upon My Death?

My Property Is Titled in the Name of My Trust. Is it Protected from Lawsuits?





Q: What are the Primary Non-tax Estate Planning Considerations?

There are a number of very important non-tax considerations that every spouse, parent, and grandparent should consider.  The primary ones are as follows:
• Who should inherit the assets in terms of general amounts or percentages?
• Who should inherit specific assets and personal effects?
• Should the assets be distributed outright or be left in trust?
• If they are left in trust, should separate trusts be established for separate beneficiaries, or should common trusts be used for classes of beneficiaries?
• Over what period of time and with what if any restrictions should each inheritance be distributed?
• What persons and/or institutions should be named as trustees or co-trustees?
• How should the trusteeship be configured?


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Q: Why is It Important to Decide Which Specific Assets Are to Pass to Each Beneficiary?

Some assets cannot be divided, and others have value only in a particular beneficiary’s hands.  For example, should stock in a closely held business be passed equally to three children when only one of them is very active in the business and the other two have successful careers apart from the business?  You may want to specify in your will or trust that one child receive the stock and the others receive other assets.  Also, many assets, such as personal effects, may be better handled by simple written instructions or lists that you can personally maintain and change.


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Q: Can I Leave Some or All of My Estate to Someone Other Than My Surviving Spouse?

Virtually every state has laws which protect the rights of a surviving spouse.  Typically, these laws allow a surviving spouse to make a claim against an estate for between 33% and 50 % of the estate, including a right to recover his or her statutory share from transfers intended to circumvent the laws.  In Florida, the surviving spouse’s elective share is 30%.  Thus, you could leave up to 70 percent of your estate to someone other than your spouse without affecting the integrity of your plan.


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Q: What Are the Obstacles to Creating a Smoothly Working, Carefully Coordinated Estate Plan in Families Composed of Second Marriages?

With second marriages, estate planning can become very complex and emotional.  Often one spouse, or both spouses, has been married multiple times and has children from one or more of the previous marriages as well as the current marriage.  All of these relationships must be explored to determine what provision will be made for each class of heirs.  Each spouse has individual decisions to make about his or her own children and grandchildren and about how and what he or she will leave to the other spouse.
There are also many issues relating to who will control the assets after one spouse dies and how the assets will be distributed after the death of the surviving spouse.  One of the most perplexing planning situations arises when a current spouse is close in age to the children of the previous marriage.  The older spouse must decide if he or she will leave assets to the younger spouse to defer estate taxes until the younger one’s subsequent death, thereby making the children from the previous marriage wait perhaps many years until the death of their step-parent to receive their inheritance. 


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Q: What Are the Practical Implications of Planning for the Timing of Trust Distributions?

Minors cannot receive or hold property until they reach the age of majority (18 years of age in some states and 21 in others).  Trusts are needed to hold their inheritances until they reach this age.  Most children are neither ready nor mature enough to handle large inheritances at any age, especially the “threshold” age of 18 or 21.  Distributions of vast amounts of money to adult children or distributions of moderate amounts of money to very young ones can destroy, rather than build, responsible lives.  Also, some children have mental, physical, or emotional handicaps that require special trusts that specifically address their needs.  Even if your children are capable of handling money, you may want their inheritance to be held in trust, with the estate tax due when the inheritance subsequently passes to your children.  Your trust can and should be drafted to allow for the distribution of your assets to your beneficiaries in exactly the manner you deem most appropriate.


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Q: Can I Distribute Part of My Assets to My Children Upon My Death and the Remainder of My Assets to Them Upon My Wife’s Death?

Yes.  Tax issues aside, you are generally free to distribute your property at death any way you desire, subject to the surviving spouse’s rights (discussed above) and the claims of your creditors.  If the distributions to your children at your death do not exceed your exemption amount, no estate taxes will be due.


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Q: Do I Need to Treat My Children Equally in My Estate Distribution Plan?

No.  How you distribute your assets upon your death is a personal matter.  You may choose to have your assets distributed equally among your children or in whatever proportions you deem appropriate.  You may even disinherit children entirely.  It is, of course, important that you have a qualified estate planning attorney prepare your will or trust to specifically set forth your distribution objectives and intentions.


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Q: Can I Use the Assets in My Estate, After My Death, to Encourage My Heirs Toward Worthwhile Endeavors, Rather Than Simply Creating a Generation Without the Incentive to Accomplish Anything?

Yes.  Find a professional who will work with you to create a family incentive trust.  This type of trust encourages virtuous and worthwhile pursuits, while perhaps discouraging undesirable behavior, through the strategic use of monetary incentives.  Just what is worthwhile or undesirable is entirely up to you, as the creator of the trust, because, after all, it is your money.  A family incentive trust can be used for many circumstances.  For instance, you may want to reward educational achievements, such as a high school, college, or graduate degree, or vocational accomplishments with additional funds; or you may want to provide the opportunity for a child to stay at home to raise his or her children rather than be forced into the workplace to supplement the family income.  You may also want to stop trust distributions in some situations, say, because of substance abuse.  The menu of virtuous incentives and their undesirable counterparts is limited only by your creativity and the number of individuals for whom you are planning.


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Q: I’m Holding a Mortgage on the Home of One of My Children. What Are My Options As to What Will Happen to It Upon My Death?

Your death does not extinguish your child’s responsibility to pay back the mortgage unless you specify this in your will or trust.  There are several ways you can handle this note:
 You can forgive the remaining balance at the time of your death and not have it included in the estate assets that are distributed, especially if you have specified which assets will be left to each of your children.
 If you want to have an equal distribution of all your assets, your planning documents can request that the balance outstanding on the note be computed into your estate and that your executor or successor trustee subtract that amount from the child mortgagor’s portion of the assets.
 You can make your trust or estate the payee of the mortgage and have the payments continue to be made to that entity
You should consult a professional advisor regarding the potential income and estate tax implications of each option.


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Q: My Property Is Titled in the Name of My Trust. Is it Protected from Lawsuits?

No.  Most living trusts are revocable, which means they can be revoked, amended, or cancelled at the discretion of the maker.  Because you control the assets in the trust as the trustee and you can revoke the trust as its maker, funds in a living trust are at the same risk in the event of a judgment against you as they would be if they were titled directly in your name.  However, your trust may be designed to protect your assets from the creditors or predators of your spouse, children, and other loved ones, after your disability or death.


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