Goldman's "Golden Rules" of Estate Planning – Part II - Trusts & Estates and Elder Law Newsletter

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3.14.14

Link to Part I

10. “Never look a gift horse in the mouth”

• Don’t forget gifting as part of your estate plan.
• Federal unified gift and estate tax exemption amount is $5,340,000 in 2014.
• Annual exclusion gifts – $14,000 per year, per donee.
• Gifts for education and medical expenses don’t count toward $14,000 annual exclusion.
• Discounted gifts – gifts of a limited partner interest or an LLC interest – (a) need to substantiate the discount (e.g., appraisal), (b) the strategy is carefully scrutinized by IRS, (c) watch out for “business purpose” and control tests.
• After ATRA, 2012, need to weigh benefit of estate tax savings through gifting v. loss of stepped-up basis for donee for income tax purposes.

11. “But the greatest of these is charity”

Charitable bequests can satisfy your charitable inclination and save you money as well.

• Outright bequests,
• Charitable remainder trusts,
• Charitable lead trusts.

12. “It’s time to hang em up”

Pay attention to proper designation of retirement plan and IRA beneficiaries to maximize income tax benefits.

Pay attention to proper designation of retirement plan and IRA beneficiaries to maximize income tax benefits.

• Designated beneficiaries,
• Don’t name estate,
• Spousal rollover,
• Stretch IRA,
• Use of trusts.

13. “I got the power”

• Signing a general durable power of attorney allows you to name an agent to make financial decisions for you and can avoid costs and hassles of a guardianship proceeding in the event of a disability.
• “Springing” power of attorney only becomes effective on the occurrence of a triggering event (e.g., certification of disability by your regular physician (or other licensed physician).

14. “Living well is the best revenge”

• Make sure to execute a health care document or documents to name an agent to make medical/health care decisions for you if you are unable to do so.
• NY – Health Care Proxy, Living Will.
• NJ – Advance Directive for Health Care.
• You can set forth your wishes regarding use of “heroic measures” if you are in a “terminal” condition – do you want mechanical respiration, artificial nutrition and hydration?
• Organ donation.
• Failure to make your wishes known can result in lengthy, painful family disputes.

15. “Nobody’s perfect!”

• Don’t put off implementation of your estate plan until you develop the “perfect” plan.

16. “It’s never too late”

• Even if you haven’t done any estate planning yet, do it now. You could save your family a bundle and avoid headaches after you’re gone.