Services
Over 35+ Years of Experience
We provide comprehensive, holistic, and creative estate planning for high-net-worth families. We help our clients meet complex and even seemingly contradictory personal, business, financial, and tax goals. We treat clients with thoughtful care—just as we would treat members of our own families. Our planning extends beyond merely providing documents. We tailor your plan to your unique circumstances and needs.
Overview
■ How We View Comprehensive Estate Planning.
What is Estate Planning?
Effective Planning
To address critical goals, the process must be holistic and address a broad range of planning, not just simple questions like “Who do you want as your executor.” Important personal issues should be addressed. While these are unique to each individual, they may include family dynamics, business succession, religious considerations, financial and retirement planning, asset protection, planning for longevity, income tax planning, business issues, health issues, as well as estate taxes and disposition of assets. This approach may lead to sounder answers that solve real problems.
This process can be more time-consuming and costly than simply completing standard documents. It may also result in discussions of topics that are inherently unpleasant, such as addressing mental health challenges, addictions, family conflicts, etc. While a more sterile and superficial approach can be taken, which is common in many estate plans, it may not yield the desired results. It may not protect you or your loved ones. We view our role as helping you, even if that means delivering tough news on family issues, your expectations, finances, or other problems. To do anything less would lack integrity and not truly be helpful. While this can be a challenging process, it may be essential to security and peace of mind for you and those you care about.
Planning Foundation
While documents are almost always an essential part of the product, they are never the entirety of the result nor often the most critical component. Documents must be based on a plan. A good plan will almost invariably require the input or even active involvement of your wealth manager, CPA, insurance consultant, and other experts (appraiser, care manager, investment banker, etc.).
Intelligent, not “Simple”
Some people get fixated on simplicity. If there are three different ways to achieve a planning goal, it may be reasonable to use the most straightforward approach unless there is a strong reason to use a different option. However, simplicity as a primary goal is never helpful to you or the planning process.
Your iPhone might be simple to use or the icons easy to understand, but the technology behind it is incredibly complex. Few lay people understand how a drug prescribed by their physician addresses a health issue or affects the body. That does not stop everyone from using an iPhone or taking medicine.
While you must and will understand the big picture of your estate plan, especially the components tailored to your unique circumstances, limiting your plan to what you think is simple is not only unrealistic but harmful. Even accomplished attorneys who are not estate planning specialists will struggle to understand Generation-Skipping Transfer (“GST”) tax planning. But that complexity doesn’t mean it should not be integrated into your plan.
Collaboration
A collaborative team effort is essential to design and implement a holistic and complete estate plan. This means other advisers (your CPA, wealth adviser, insurance consultant, etc.) must be involved in planning and administrating your plan. This lessens the importance of the role of any one adviser but also gives each adviser the latitude to help better achieve the goals you identify as the process evolves. While many advisers appreciate the opportunity to work collaboratively, it will enhance this beneficial process if you encourage all your advisers to do so.
Process Overview
Estate planning is too often misperceived as obtaining a document. It is never just that. It must include gathering information and documents, making important decisions, and then creating a plan appropriate for your specific situation. With planning determined, documents necessary to implement the plan can be drafted. Once implemented, your plan must be monitored to enhance the likelihood of success. This requires periodic meetings, communication with all your advisers, and your follow-through.
Typical Process Steps
Estate planning is too often misperceived as obtaining a document. It is never just that. It must include gathering information and documents, making important decisions, and then creating a plan appropriate for your specific situation. With planning determined, documents necessary to implement the plan can be drafted. Once implemented, your plan must be monitored to enhance the likelihood of success. This requires periodic meetings, communication with all your advisers, and your follow-through.
- Once you have chosen to retain us, schedule an initial web meeting at your convenience (2+ hours).
- We will provide you with a package of documents, including a representation agreement to formally retain our services (signed using DocuSign), a questionnaire to complete before the initial web meeting, and articles with information on the planning process.
- After the initial web meeting, we will prepare a memorandum analyzing the information you provide and making preliminary recommendations of options you might consider.
- Schedule a brief follow-up web meeting to review the memorandum (1 hour).
- You’ll receive a written plan, options, and recommendations.
- You can make decisions about the planning, documents, and how you want to proceed. If you want to have a further discussion before doing so, that can be handled however you wish.
- Documents will be drafted and reviewed with you, revised as necessary, and then signed.
- You will receive all of your original documents (we hold no originals and are paperless) and detailed planning memoranda, letters, and instructions to help you, your loved ones, and other advisers understand what was done and why.
- An electronic cloud portal will be set up, containing electronic copies (PDFs) of your documents. You can provide access to your other advisers and trusted family members/friends. See Portal FAQ.
For more complex plans, planning/trust/entity checklists will be created to guide you and your advisors in maintaining them. All documents will be organized based on that checklist and posted to your cloud portal.
How We Work
The estate planning process described above is different than the approach some other estate planners may take. Consider whether you are comfortable with and committed to a comprehensive and holistic planning process.
For the relationship to succeed, we must have mutual trust. You have to trust our competence and caring. We have to trust you to be honest, participate as a partner in the planning process, follow up on your role,
administer your plan, treat us professionally, and pay our bills timely and without difficulties.
We do not focus on cookie-cutter work and documents. Because of that, we do not provide estimates of fees or time, calendar time to complete a project, or estimated hours to perform tasks. In our experience, creating a holistic, tailored, and comprehensive plan for you is not susceptible to reasonable estimation because it is so personalized.
You should be comfortable working collaboratively with all of your advisers engaged.
Wills, Powers of Attorney, Health Proxies
Whatever your circumstances, legal documents to protect basic estate and personal needs are essential. These may include:
Revocable Trusts
A revocable trust may reduce the costs and publicity of probate. It can be used to manage assets through aging and disability. It can integrate checks and balances to reduce the risks of elder abuse.
A revocable trust can avoid court involvement as compared to trusts for heirs created under a will.
■ Irrevocable Trusts
Irrevocable trusts come in many varieties. They can help protect assets from lawsuits, claims, or divorce (for you and/or your beneficiaries), save estate taxes, reduce state income taxes, and more. We can help you choose the trust plan that you want, draft the trust, and implement the plan.
Types of Trusts
There are many variations and trust techniques, the combination and elements of which should be selected and crafted to meet your unique goals. Some of these are noted below.
Accumulation Trust—this is a trust designed to hold IRA and retirement assets. After the Secure Act, only “Eligible Designated Beneficiaries” still qualify to stretch payments over life expectancy. The trustee has discretion as to distributions, but all remaining funds have to be paid to the trust at the end of the tenth year following the plan holder’s death. This might result in compressing the entire remaining plan balance in the trust’s taxable income in one year. That can create costly income tax consequences that should be planned for in advance.
BDIT—Beneficiary Defective Irrevocable Trust is a trust that is characterized as a grantor for income tax purposes for a person other than the settlor. This might be accomplished by giving the designated individual a Crummey power over assets issued to the trust.
BDOT—Beneficiary Deemed Owner Trust is a trust that is characterized as a grantor trust to a person other than the settlor. For example, a person may be given the right to withdraw certain income from a trust, thereby making that income taxable to that person. That might be done to reduce state income taxation.
CLT—Charitable Lead Trust requires that a payment be made each year to the charity or charities designated in the instrument. That payment may be structured as an annuity payment (CLAT) or a unitrust payment (CLUT) and should be calculated and paid accordingly. There are many variations of a standard CLUT.
Conduit Trust—this is a trust designed to hold IRA and retirement assets. Following the Secure Act, only Eligible Designated Beneficiaries still qualify to stretch payments over life expectancy. In addition to the annual required minimum distributions, at the end of the tenth year following the plan holder’s death, all assets need to be distributed out to the named beneficiary. That can create various financial and tax issues that should be monitored in advance.
CRT—Charitable Remainder Trust is the inverse of the CLT above. The current non-charitable beneficiaries must receive a payment each year, with the remainder going to charity at the end of the term. That payment may be structured as an annuity payment or a unitrust payment.
ESBT—Electing Small Business Trust can hold S corporation stock without disqualifying the S corporation’s favorable income tax status. The trust must pay income tax at the highest rate on S corporation income. The appropriate election for ESBT status must be made.
Grantor Trust—the income of a grantor trust is required to be reported on the grantor’s income tax return. These trusts are the cornerstone of much of estate planning. Grantor trusts might include an array of special powers or provisions that non-grantor trusts cannot have, such as a power to swap or substitute assets of equivalent value for trust assets, a discretionary right in the trustee to make tax reimbursement payments to the settlor, the power someone may hold to add additional beneficiaries, etc. Congress continues to threaten to restrict their use.
GRAT—Grantor-Retained Annuity Trust is a trust that requires the payment of a periodic annuity, which can be fixed or increased annually. The payments are generally due with a 105-day grace period. GRATs can leverage large gifts at no gift tax cost to heirs. Congress continues to threaten their restriction.
ILIT—Irrevocable Life Insurance Trust generally holds one or more life insurance policies on the settlor’s life. In the typical ILIT, gifts are made annually, annual demand or Crummey power notices are issued, and then the premium is paid.
Note Sale—Appreciated assets may be sold to a trust. Typically, but not always, the trust is a grantor trust to grow value outside the estate.
QSST—Qualified Subchapter S Trust holds S corporation stock, so compliance with the QSST and S corporation rules should be monitored. The trust will have to distribute income to the beneficiary, who must pay income tax on those amounts, and those payments should be monitored. The appropriate election for QSST treatment should also be made.
QTIP—Qualified Terminable Interest Property Trust is a trust that qualifies for the unlimited gift or estate tax marital deduction.
Split-Dollar Life Insurance—Split-dollar is a means of financing the purchase of life insurance. Family split-dollar arrangements may be made with an ILIT as a party. If, for example, a loan split-dollar arrangement is used, a statement required by the Treasury Regulations must be attached to the tax returns for the parties to qualify as a loan split-dollar.
Valuation Adjustment Mechanism—This is a technique to endeavor to adjust the value of an asset gifted or sold to a trust. There are many variations of these techniques, but it is essential that whatever technique is used, the technique’s impact is reported consistently with the technique used on all income tax returns, financial reports, trust statements, etc.
■ Asset Protection
Asset protection planning involves legal and related steps that may make it more difficult for malpractice claimants, divorcing spouses, or creditors to reach your assets. We can suggest practical steps along a continuum of possibilities, draft the necessary documents, and assist you in implementing the plan.
Everyone Needs Asset Protection
Asset protection planning should not only concern physicians, lawyers, executives, or other litigation-prone fields. Our society’s litigious nature only seems to grow, and a creditor or claimant may jeopardize your financial future due to a claim. You should take steps that are appropriate to your wealth level and risks to protect your assets.
You should have your property, casualty, and liability insurance reviewed periodically by an insurance expert to identify gaps or the need for higher coverage limits.
Trusts as Asset Protection Vehicles
Most estate planning relies on trusts, but many trust provisions are not designed to protect assets. Some trusts, especially older ones, provide for mandated distributions of income, distributions of principal at specified ages, or distribution standards that are to maintain a standard of living that might be reachable by claimants. Decanting into a new trust might reduce those risks.
A modern and more protective trust can be created in a trust-friendly jurisdiction (such as Nevada, Alaska, South Dakota, and Delaware, among others) with an independent trustee, a trust protector, discretionary distribution standards, and other features. Modern trusts can be combined with entities (e.g., limited liability companies) and structures to enhance protection further.
■ Tax Planning
Tax planning can include steps to reduce transfer taxes (gift, estate, and generation-skipping transfer), federal income taxes, and/or state income taxes. We can coordinate with your CPA, wealth, and other advisers, plan for residency and domicile, create trusts that accomplish your goals, and more.
Estate planning has traditionally focused on reducing the federal estate tax. However, tax planning has become more complex than ever. For many families, a careful balance of income and estate tax issues should be considered to reduce overall tax burdens. Reducing state and federal income taxes can be as important as reducing estate taxes.
Federal estate taxes may be a concern. Steps might be warranted to increase the likelihood of reducing federal estate taxes. Incorporating flexibility in the planning is essential to attempting to address changes in the future that may affect the planning, especially if Congress makes the tax laws harsher or eliminates the estate tax. Planning is now essential if your estate will be subject to a federal estate tax.
State estate or inheritance taxes can be complex to plan for. The rules differ by state. While the costs are potentially significant and should be planned for, the state estate tax rate may not always justify costly planning.
Residency is where you are taxed for state income tax purposes. This can differ from domicile, which is where you are taxed for estate tax purposes. If you own real estate in a state with a state estate tax, that state will tax it on your death. So, your planning team should consider how assets are held, residency, domicile, state income taxation, and state estate taxation to endeavor to reduce overall taxation.
With the current income tax rates and the 3.8% Medicare tax on net investment income, capital gains could be taxed as high as 30% for some clients living in high-tax states. The cost of a capital gain could exceed the cost of a state estate tax. Even for wealthier clients subject to a federal estate tax but no state estate tax, the spread between the capital gains rate and the federal estate tax rate may not be large. The relationships of these various tax rates change the planning dynamic, often dramatically, and the rules may be changed.
■ Administering Your Planning
Creating an estate plan (will, revocable trust), entities (LLCs, S corporations, etc.), and irrevocable trusts (insurance trust, SLAT, etc.) will not achieve your goals (protection as you age, tax savings, asset protection) if your plan is not monitored and maintained properly and in conformity with the terms of the documents for each trust and entity. We can create a roadmap to administer your plan and assist you and your other advisers to whatever degree you choose.
We can work with you to see plans through implementation and ongoing operation. We can also, if you permit, work with your team to monitor your plans once they are in place to enhance the likelihood that they are functioning as designed.
We recommend annual review meetings to accomplish this. Implementing and monitoring any plan should involve meeting with your estate and financial planning team at least annually so that each expert can be assured that issues related to their area of expertise are addressed and that the team is coordinated overall.
Failing to properly administer an irrevocable trust that forms the core of an estate plan could undermine the entire plan, not just the trust. It can result in a loss of asset protection and tax savings. If trusts that are designed as an integral part of an integrated estate plan fail, the overall plan may result in distributions that are not what the settlor intended.
■ Probate
Losing a loved one is a difficult emotional situation that results in personal, legal, tax, and other issues. We can guide you through administering the estate as the plan and law require and reduce personal antagonism and angst, taxes, etc.
Ensuring that estates are appropriately administered can be challenging and emotional, particularly when there is conflict between parties. We work with clients to ensure that estates are administered as the decedent intended them.
We can coordinate with the Executor’s accountants or recommend advisers to have any necessary income, state estate tax, and federal estate tax returns prepared for the estate.
■ Close Businesses
Planning, creating, and managing various entities can help you, your family, and any closely held business achieve business, succession, estate planning, and other goals. We work with you and your other advisors to identify goals, create entities, draft legal documents, and address unusual or complex estate planning, corporate, and other issues that might arise.
Closely held businesses impact the families that own them emotionally and financially, and we take pride in creatively balancing a wide range of concerns with you. We can help you consider, develop, and implement business succession plans, enabling smooth leadership transitions with minimal disruption.