Gary Altman Responds to a Host of Estate Planning Questions


  1. What happens if you die without a will?
    If you die without a Will, the state you live in has one for you. It determines who gets your assets and who controls. Usually this means that your spouse and/or children will receive your assets, but each state has a different law. Why would you want some law written many years ago to determine who receives your assets when you die.
  2. Ethical wills/legacy plans?
    A typical Will only governs your financial assets. Your goals, dreams, aspirations for your children, your family history can all be passed on by creating what is called an ethical will. While this is not a legal document, and you do not need a lawyer to draft one, you should consider creating a document that passes on your hopes and dreams to your children and grandchildren.
  3. How to save on gift, estate and income taxes business.
    Probably the most effective tools to save on estate taxes today are grantor retained annuity trusts and sales to intentional defective grantor trusts. With the low interest rates that are used when calculating the tax savings, these techniques can shift significant assets to someone’s heirs without any gift or estate tax.
  4. Family limited partnerships. A family limited partnership may be a great estate planning tool, but it should only be used when there is a legitimate business and when it will be followed completely. Most family limited partnerships fail because either there is no business (i.e., just investment assets) or the creator uses it as a checkbook and totally ignores the other members of the family limited partnership.
  5. Do do-it-yourself forms suffice?
    No, these documents cannot easily be changed when they are needed. So, if a mistake is made, whether because someone checked the wrong box or misspelled a name, it is more costly to correct than doing it right in the first place. Just like you would not perform heart surgery on yourself, it is probably equally unwise to draft an estate planning document yourself.
  6. Pet trusts.
    Many people care deeply about their pets and want to insure that their pets are taken care of after they die. A pet trust can be used to allow a trusted friend or advisor to use your money after your death to provide the funds to care for your pets. Not all states allow for a trust to be solely for a pet and there are tax issues to consider, but a careful drafted pet trust will insure that there are sufficient funds to care for someone’s beloved pets.
  7. Insurance trusts
    There are two issues here. The first is estate taxes. If someone’s estate will be subject to estate taxes after he or she dies, then removing the life insurance death benefit from the taxable estate is usually a very good idea. This is because life insurance on your life which you own is included in your estate, for tax purposes, when you die. However, a life insurance trust is not a good idea when someone is using a life insurance policy as an investment tool for their own retirement. But, if the life insurance is solely for the use of your loved ones after your death, then placing the life insurance in an irrevocable life insurance trust could save your loved ones significant estate taxes. A second issue is how your loved ones will receive the death benefits. Sometimes the beneficiary is a minor or a child with special needs and if the beneficiary receives the proceeds outright, that could be a major mistake. Using a life insurance trust as the beneficiary of a life insurance policy will allow the insured to control how the death benefit will be used after death.
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