Estate Planning Trends

Clients’ top three reasons for seeking estate planning advice last year were (1) to avoid discord among beneficiaries, (2) to avoid probate, and (3) to protect children from mismanaging their inheritance. Clients also sought estate planning advice on asset protection for their children. In response, many firms set up safety net trusts to protect an heir’s inheritance and structured the trusts with the child’s future divorce or creditor problems in mind.

When creating estate plans, it is important to remember that nearly half the states impose separate estate or inheritance tax. The low interest rates right now make it an excellent time for clients to create a charitable-lead annuity trust to efficiently transfer wealth to younger generations. The trust provides assets to a charity for a designated period, and then the trust returns to the client or the client’s heirs. Any excess earnings of the trust pass to the beneficiaries tax-free.  

See Liz Skinner, Estate Tax Lull May Trap Wealthy, Investment News, Jan. 15, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.