Estate Planning and Wealth Transfer

Estate Planning and Wealth Transfer

Proper estate planning better ensures the current and future financial security for you and your family, allows you to transfer your wealth according to your wishes, and eliminates unnecessary taxes and expenses.

We are committed to working with you and your family to help determine your long-term personal financial goals and plan accordingly. In addition, we will work with you in structuring your estate assets to minimize tax liabilities and maximize value to future generations. Our professional team will work with any additional advisors you may have, such as an attorney or accountant, to develop and implement a plan of action. All of this planning will be coordinated with your insurance contracts in order to provide a sound workable plan. Periodically, we will review this plan in order to assess our progress in accomplishing your long-term objectives.

Ultimately, our goal is to assure that you and your family have taken prudent steps to reduce your tax liabilities and to create the most effective means to help finance any tax liabilities that may remain in the future.


Charitable Planning

At a time when social responsibility has taken on increasing importance, charitable planning offers a strategic way for you to connect to causes that you and your family feel passionate about. Whether your aim is to develop a philanthropic legacy for your family, or simply to support your community, tax-favored planned aiding programs create ongoing opportunities to transfer family assets to public and/or private charities. These charities often include family foundations that are managed by family members, in which the family retains control over the gifted assets and access to income generated by these assets.



An important component to any estate plan is gifting, which allows you to reduce the size of your taxable estate by impacting the wealth you have worked so hard to create for your family members.

Gifting enables you to take advantage of the substantial tax advantages available through the use of lifetime gifts. These gifts can be held by various entities, which allow you, the “grantor,” to retain control over income from gifted assets.

Gifts are money and property that you give to an individual or charity. Gifting can help reduce the size of your estate and minimize your estate taxes. You can give anyone you choose a tax-free gift of cash or property worth up to $14,000 in 2013. If you and your spouse use gift splitting, the tax-free amount may be increased to $28,000. In addition to annual exclusion gifts, an individual may be able to gift their lifetime gift exemption amount of $5 million; $10 million if gift splitting is used.

There are different ways to make gifts. Gifts may be given outright to individuals or in a trust. You can establish custodial accounts for your children through The Uniform Gifts to Minors Act or The Uniform Transfer to Minors Act. Another type is the qualified transfer, which can be used for making special gifts such as paying for someone’s education or medical bills. A qualified domestic trust also may be used when you are giving to a spouse who is not a U.S. citizen.

Making gifts may be a consideration at any time, whether you’re developing a financial plan or reconsidering the one you have. Gifting is especially important in the estate planning process.



Trusts serve a variety of purposes. Some are created to hold, manage and distribute property. Others may be created to avoid probate or save on taxes.

A trust often makes sound financial sense as it can help ease the burden of managing your assets (including your investment portfolio), even after disability or death. A trust may also contain provisions for the care of your children in the way you choose, not the way someone else decides. It can help both simplify the administration of your estate’s assets (including the regular payment of taxes) and strengthen your beneficiary’s claim to disputed property.

A trust creates a legal arrangement between the person who establishes it (the creator or grantor), the manager of the trust’s assets (the trustee) and the person or organization that benefits from the trust (the beneficiary). It can be established in one of two ways:

  • Testamentary, which is created by your Will, funded by your estate and administered by a trustee named in your Will.
  • Inter vivos (or living), meaning that it is created while you are alive and usually set up to manage assets or transfer property outside the probate process. It may or may not have tax advantages and can be either revocable or irrevocable.

A trust gives you control of the trust’s income and enables the transfer of property to your beneficiaries.

Setting up a trust can be done at any time. It is often one of the legal arrangements considered during the financial planning process. If you don’t already have a plan developed, contact a financial advisor to help get you started. To create a trust, you will need to contact a lawyer.


Living Will

A Living Will is used to specify the degree of medical treatment that you would want should you become terminally ill or permanently unconscious. It helps make your health care wishes clear to your family, friends and doctors — helping to ensure that those wishes are carried out. In addition, it eases the burden on your loved ones who might otherwise have to make serious decisions for you.

Although a Living Will can be drawn up without the help of a lawyer, your wishes still need to be authorized. You can do this by naming a health care proxy, which is a person you authorize to make decisions regarding your treatment. You also may grant a durable power of attorney to someone who, like the proxy, then has the power to make the health care decisions you want.

If you feel strongly about the kind of medical care you would or wouldn’t want to receive should you fall gravely ill, you should draft a Living Will as soon as possible. Court cases involving a patient’s right to live or die often involve younger people, not the elderly.

To get started, put your wishes on paper. If you are already working with a lawyer to draft a Will regarding your estate, you should consider drafting a Living Will at the same time.



A Will is a legal document that specifies who will get your property when you die. It names the people you want to settle your estate and administer any trusts you have established as part of your Will. It also names the individuals you want to care for any children you may have.

By executing a Will, you maintain some control over the disposition of your property after your death. Generally estates can be settled faster, easier and with less expense with a Will than without one. If you have a large estate, drawing up a Will in combination with one or more trusts can help limit the tax liability of your estate.

Executed properly, a Will also can enable you to transfer property and investments to your heirs. Wills requiring complex estate planning strategies, including trusts, are best prepared with the help of your lawyer.

If you die intestate, or without a Will, you will lose control over your estate. Although your property will most likely go to your spouse and children in this case, different states have different ways of dividing estates which may affect the outcome.

If you are creating a financial or estate plan, it makes sense to establish a Will as part of the planning process. Assistance from a lawyer familiar with Wills and estate planning is considered the best way; in fact, some states require it. In any case, your Will must include your signature and those of two or more people who witness your signing of the document. Witnesses cannot be beneficiaries of your Will.


Transfer Tax System

The American Taxpayer Relief Act of 2012, signed into law on January 2, 2013, permanently unifies the federal gift and estate tax systems, as was the case in 2011 and 2012.  The top federal tax rate has been increased to 40%.  The exemption level remains at $5,000,000 ($10,000,000 for couples), indexed annually for inflation, and is expected to result in a $5.25 million exemption for gifts made in 2013 and estates of descedents dying in 2013.  (For a summary of the American Taxpayer Relief Act of 2012, please click on the attached pdf document below)

Property transfers are taxed based on the fair market value of the property at the time the transfer occurs. With a few exceptions and exemptions, the lifetime transfers are combined with transfers occurring. Here are the key exceptions you should be aware of:

  • The annual gift tax exclusion allows every individual to transfer, as a tax-free gift, up to $14,000 per year per donee. There is no limit on the number of donees. To qualify, the gift must be considered at “present interest.” The $14,000 figure (and $28,000 for split gifts by a married couple) is indexed for inflation in future years.
  • The marital deduction allows transfers between spouses, during lifetime or at death, that do not incur transfer taxes as long as the spouse is a U.S. citizen. Using a marital deduction, however, does not eliminate transfer taxation, it simply defers it. Careful planning can help you avoid the shifting of assets into a higher transfer tax bracket.
  • The charitable deduction lets you make transfers to qualified charities, providing a deduction from the estate and gift transfer tax system. Techniques are available that combine the tax advantages of charitable giving with the natural desire to provide for family members.
  • Life insurance is subject to a special rule for property transfers. If a person gives away a life insurance policy, he or she must live three years after the transfer has been made. Otherwise the entire death benefit of the policy is included in the gross estate of the donor/insured.


Generation-skipping transfer tax

This tax is in addition to estate and gift taxes, and hits transactions that skip generations (e.g., when grandparents gift assets directly to grandchildren). Each grandparent is entitled to a $5.25 million exemption in 2013 from this tax.  Tax rules for such transactions are complex and poor planning may result in the amount of tax exceeding the value of the transferred asset.

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.