Estate planning helps you determine what happens to the assets you leave behind.
Estate planning, the process of planning how to preserve your assets for your heirs, is not just for the very wealthy. Everyone should engage in some form of estate planning. After working hard for many years, building up a business, and accumulating assets, you should make sure that those assets will not be unnecessarily used up (or wasted) but are preserved for your survivors.
The goal of preparing an estate and gift plan is to transfer wealth to loved ones, and ensuring the inherited assets are protected. PCA can help create an estate plan by making financial projections and estate calculations which will minimize taxes and maximize the inheritance you give your beneficiaries. We provide customized estate plans tailored to clients’ visions for the future. We aim to conserve clients’ assets with the lowest possible tax and administrative cost.
Our focus is clear: we provide wealth preservation and transfer techniques for individuals and their families. Individuals face an ever-changing estate tax environment. To create a strong plan, expert tax and estate planning guidance from your accountant and counsel are critical.
Here’s a basic guide to wills, trusts, and other estate planning tools.
An Overview of Estate and Trusts
What constitutes your estate? Essentially, it includes everything you own at the time of your death. Occasionally, rules can apply which may bring back into your estate assets you’ve given away, or thought you’d given away.
Taxation considerations for your estate will vary depending on factors such as where you live and the total value of your estate. That’s why it’s so important for you to speak with your accountant to determine the most appropriate way for you to establish an estate plan that works for you.
In addition to a last will and testament, there are other important tools and documents you should consider:
- Power of Attorney
- Trusts
- Postmortem letter
- Life Insurance
- Joint Accounts
- Joint Title
Estate Tax Compliance
After a family member has passed, we ease the estate and asset transfer process by assisting families with the required compliance reporting. Although the most effective tax planning is typically during one’s lifetime, many estate tax planning concepts can be incorporated along with the final compliance reporting. Working together with the family unit and the beneficiaries is a key component to effective estate tax compliance.
Basic estate compliance services we provide include:
- Preparation of Estate Tax Returns
- Preparation of Gift Tax Returns
- Preparation of Income Tax Returns for Estates and Trusts
- Business Valuations
Trusts
A common misconception is that trusts are only suited for use by the very wealthy. That is just not the case today. People in a wide range of income levels use them as estate planning tools. Trusts can be complex and costly to set up and run, requiring a higher level of services from an attorney than wills. Certain trusts can also be simple and accommodate specific purposes easily.
- Simple Trusts
- Family Trusts
- Irrevocable Trusts
- Life Insurance Trusts
- Charitable remainder Trusts
- Generation Skipping Trusts
Trusts are useful in accomplishing various estate and financial planning goals. Trusts can be used for many worthwhile purposes, some of which are listed below:
- Giving property to children
- Reducing estate taxes
- Leaving assets to spouse
- Providing for life insurance to pay estate tax
Your accountant, together with your attorney, will be able to advise you if a trust is a viable proposition for you.
Life Insurance
The main purpose of life insurance is to provide for the welfare of survivors. But life insurance can also serve as an estate-planning tool. For example, it can be used to finance the payment of future estate taxes or to finance a buy-out of a decedent’s interest in a business. It can also be used to pay funeral and final expenses and debts.
Other Estate Planning Tools
Proper tax planning happens during your lifetime, not after you pass-away. The most efficient ways to transfer assets is through gifts during your lifetime. Some common tools used to help transfer assets during ones lifetime may consist of:
- Gift Planning
- Family Limited Partnerships
- Family Limited Liability Companies
- Other Family Trusts
Postmortem Letter (and Other Instructions)
If you pass away, will anyone but you know where your tax records and supporting tax documents are located? How about your important documents such as deeds, titles, wills, and insurance papers? Does your family and business associates know who your accountant/lawyer/broker are? By failing to leave your heirs (and associates) this information, it will cause a lot of headaches and may also result in additional taxes and costs being incurred without the appropriate documentation.