Legal Estate Planning Solutions: Practice Areas

WILLS

Positives:

Less time and cost to set up (does not require "Funding" or much decision-making)
Allows for tax planning (but requires setting up costly Testamentary Trusts after probate)
Names Guardian for Minor Children

Negatives:

Requires probate
Public Record: Financial and Asset Information Filed with Courthouse and available for public inspection
Only takes effect after you are dead
No Incapacity Planning: Judge decides who makes living, financial and medical decisions for you
Requires Court or Judge oversight and approval
More expensive to administer
Takes longer to administer through court process
May be easier to contest than a Trust

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TRUSTS

Positives:

Begins working immediately upon signing - Alive and Well.
Private: Only between you and your lawyer.
Not filed or published in the courthouse.
Does not require Probate.
Does not require Court or Judge oversight or approval.
Provides protection in the event of your incapacity or disability.
Easier to protect assets in protective trust shares to the kids.
Provides asset protection from new spouse, or from the kids' bankruptcy, divorce or lawsuits
Allows for specific gifting of specific land or assets to particular individuals
Allows for tax planning
Allows for generation skipping (from you directly to the grandkids or great-grandkids)
Not as easily contested as a Will
Easier to administer after death: Less cost and less time to administer

Negatives:

More work and expense to set up (you have to make decisions up front)
Requires "Funding" or changing title and ownership of assets in order to work

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PROBATE AVOIDANCE AND THE TRANSFER ON DEATH DEED

Positives:

Used to Avoid Probate Process
Uses Beneficiary Designations, POD and TOD designations instead of Will
Keeps your Financial and Asset documents out of public view in the courthouse
Does not create a present gift or penalty period for Medical Assistance
Less costly than Probate

Negatives:

Does not protect home or assets from Nursing Home
Does not provide for Incapacity or Disability Planning
Must be used in conjunction with POA, HCD & HIPAA

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INCAPACITY / DISABILITY PLANNING

Power of Attorney

Durable vs. Non-Durable
Immediate vs. Springing
Common Law vs. Statutory Short Form

Health Care Directive

Appoints a Health Care Agent

Living Will

Provides Health Care Agent with your preferences concerning Health, Medical, Emergency and End-of-Life Options

HIPAA Authorization

Authorizes your Health Care Agent to access your confidential medical records and discuss your treatment, services, medications, diagnosis and prognosis with your doctor

For detailed information on incapacity and disability planning, click here
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FARM AND BUSINESS SUCCESSION

What is the farm: Tillable Acres? Equipment & Machinery? The Building Site?
Should I Plan Transition During Life or Succession After Death
Preserving Assets for the Next Generation

Long-Term Care Insurance?
Life Insurance?

Minimizing Capital Gains, Estate, and Income Taxes
Ensuring Adequate Retirement Income
Sellers Goals (Mom & Dad) vs. Buyers Goals (Kids)
- Transferring Ownership
- Ability to Finance Buy-Out
- Gifting vs. Selling
Farming as an Entity?

Family Limited Partnerships (FLP)
Limited Liability Companies (LLC)
Corporations (C and S Corps)
Buy-Sell Agreements?

ENTITY PLANNING STRATEGIES

Positives:

Provides Liability Limitation and Asset Protection
Good for Ease of Ownership of multiple assets
Provides for Ease of Transferring Wealth
Easier and more efficient for Gifting Strategies
Retains control over business and assets
May provide for adequate income after Retirement
May Reduce Estate Tax, Income Tax, and/or Self-Employment Tax
Enables "Discounting" of the value of underlying assets
Ease of Succession Planning after death
Enables continuity of the Business after death

Negatives:

Additional expense to set up
Additional bookkeeping requirements to maintain
Likely requires annual renewal and update filings

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LIABILITY LIMITATION / ASSET PROTECTION STRATEGIES

Using Insurance to Cover the Risk of Loss
Entity Planning to Limit Scope of Liability
Separating Personal Liability from Business Liability
Gifting Strategies for Protecting Assets from Nursing Home
Use of Supplemental or Special Needs Trusts to Protect Assets for Beneficiaries with Disabilities
Protective Trust Shares for Kids' Liability for Divorce, Lawsuits or Bankruptcy
Pre-Nuptial Planning to Protect Surviving Spouse and Kids

TAX SAVINGS STRATEGIES

Trust Planning to Minimize or Avoid Federal and/or State Estate Taxes
Using Stepped-up Basis at Death to Avoid Capital Gains Taxes
Irrevocable Trusts to Decrease Taxable Estate
Gifting Strategies (Annual Exclusion and Lifetime Exclusion) to Reduce Taxable Estate
Entity Planning Providing Passive Income to Reduce Self-Employment Tax
IRC ?179 Accelerated Depreciation to Reduce Taxable Income
Charitable Giving to Avoid Income Taxes

MEDICAID / MEDICAL ASSISTANCE

Protecting Assets from the Nursing Home
Medicaid (SD) / Medical Assistance (MN)

Gifting Rules (5 year look back)
Penalty Period for Gifting
Spend-down Rules for eligibility
Asset Assessment for Married Couples

Asset Protection Strategies

Life Estates?
Irrevocable Trusts?

SUPPLEMENTAL AND SPECIAL NEEDS PLANNING

Trust planning to continue asset limitation eligibility for persons receiving government assistance due to disability
Supplemental Needs Trusts

Established for the benefit of another person
Remaining Trust Assets Pass to Family Members

Special Needs Trusts

Established by the person's own assets
Remaining Trust Assets First Go to Repay Government for Amount Spent on the Persian's Medical Care

Useful for passing the benefit of assets to child with disability while preserving their eligibility for government assistance like Social Security or Medicaid
Used to provide for the "extras" beyond the necessities provided by governmental assistance programs

LEGACY AND CHARITABLE GIVING

Naming Charities, Church, Cemetery Foundation, VFW, Kids Against Hunger, Missions, and Other Charitable Giving Options
Use of Trust Planning to Secure Land or Other Real Estate for Generations
Cabin Trusts to Provide upkeep and maintenance and use of Vacation Home for multiple generations
Charitable Remainder and Charitable Lead Trusts

Gift of Assets to Charity Ensures Income Payments for a Determined Period of Time
Provides for Income Tax Savings
Provides for charitable giving
Income Payments can fund wealth replacement insurance policies

Grantor Retained Interest Trust (GRIT), Grantor Retained Annuity Trusts (GRAT), Grantor Retained Unitrust (GRUT)
Intentionally Defective Grantor Trust (IDGT)
Establishing Charitable Foundations for Education and Other Charitable Purposes