The estate and tax planning analysis for individuals is usually divided into three stages:
Stage One includes analysis of a client’s current assets and estate plan and includes preparation of the client’s estate planning documents, including a will and revocable trust, asset and healthcare durable powers of attorney and often a life insurance trust. Durable powers of attorney are documents in which an individual appoints an "Agent" to make various asset and healthcare decisions on his or her behalf. The healthcare power of attorney also includes language regarding the continuation or termination of life support and an advance directive. The will and trust agreements usually include a lifetime trust structure for the trust beneficiary, which provides some protection from a beneficiary's creditors or divorcing spouse.
Stage Two addresses a client’s gifting program and evaluates liquidity needs for the payment of federal estate tax. We advise clients regarding use of the annual exclusion for gift tax purposes and making larger lifetime gifts to the next generation.
Stage Three addresses a client’s future wealth and the methods to shift appreciation to the next generation. This stage focuses on sophisticated techniques to control the rate of growth of a client’s wealth, including family limited partnerships, defective grantor trusts, grantor retained annuity trusts (GRATs), and qualified personal residence trusts (QPRTs).