The ideal estate plan will include documents that are created as a response to the specific circumstances that exist. You have many different options, and you should act in a fully informed manner. An estate planning document that is appropriate for one person may not be necessary for the next.
For example, high net worth individuals who are exposed to the federal estate tax would want to implement estate tax efficiency strategies. The tax comes into play if you are transferring more than the excluded amount, which is $11.4 million in 2019.
These are the federal parameters, and here in Vermont where we have an office, there is a state-level estate tax that sits apart from the national levy. It is quite possible to be exposed to the Vermont tax even if you are federally exempt, because the state level exclusion is much lower.
This exclusion is just $2.75 million, and the maximum rate of the tax is 16%, so it can take a significant toll on your legacy.
Certain types of irrevocable trusts are used to provide tax efficiency for people who are exposed to estate taxes. However, some of these trusts would not be of value to someone with no death tax concerns.
Last Will vs. Revocable Living Trust
You may assume that you should use a last will as an asset transfer vehicle if you are not a millionaire with estate tax liability, but this is not entirely true.
A last will can be a suitable choice in some instances, but revocable living trusts can be of considerable value to people that are of relatively ordinary means. One of the major advantages that you gain when you use a revocable living trust instead of a last will is the ability to protect a spendthrift heir.
When you create the trust agreement, you leave behind instructions that the trustee must follow after your passing. You do not have to allow for lump sum distributions to the beneficiaries. It would be possible to instruct the trustee to distribute limited assets on a monthly basis over an extended period of time.
The best way to choose an asset transfer vehicle that is right for you would be to discuss your unique situation with a licensed estate planning attorney from our firm. Your lawyer will gain an understanding of your situation and become apprised of your overall estate planning objectives. You can ultimately create an inheritance distribution plan that is custom crafted to suit your needs.
Incapacity Planning Component
Facilitating asset transfers is a huge part of the equation, and you should prepare for end-of-life issues when you are devising your estate plan. If you use a revocable living trust as an asset transfer vehicle, you could empower a disability trustee to manage the trust in the event of your incapacitation.
Durable powers of attorney are also used for incapacity planning purposes. With a durable power of attorney, you empower an agent to act on your behalf in the event of your incapacitation.
A living will could be added to state your life-support preferences.
Attend a Free Estate Planning Seminar
We have provided a little bit of food for thought in this post, and we urge you to bookmark the blog and visit us often, because we consistently add a steady stream of timely information. This avenue is always available, and there are other written resources that you can access free of charge.
Once you have this information under your belt, you will probably be ready to take the next logical step. Our attorneys are holding a number of seminars over the coming weeks, and we urge you to attend the session that fits into your schedule.
There is no admission fee at all, but we ask that you register in advance so that we can reserve your seat. To get all the details, visit our seminar schedule page and follow the instructions to register for the date that works for you.
We Are Here to Help!
If you would like to come into the office to have a one-on-one conversation about your legacy, our doors are open. You can set up a consultation right now if you call us at 802-879-7133, and you can alternately send us a message through our contact page and we will get back in touch with you promptly.
- Yes, You Need an Estate Plan - July 28, 2021
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- Are There Gaps in Your Estate Plan? - July 6, 2021
