Estate planning is the process of deciding how to effectively transfer your assets, at death, and during your lifetime. Without proper Estate Planning you could unnecessarily lose a sizable portion of your estate to taxes. While avoiding taxes is an obvious reason for Estate Planning, a more important reason may be in its ability to allow you to direct the transfer of your assets after death.

If you have an old Will, it may be time for an upgrade.

Once executed, your will should be updated regularly, especially under these circumstances: A birth, marriage or divorce in the family; a move to another state; a change in tax laws; a change in the status of dependent children; impending retirement; or a change in personal circumstances or needs.

An out-of-date will can be more trouble than having no will at all. Consider a situation involving a man who executed a will in 2001, giving $10,000 to a woman he named as a "friend." A year later, the man and woman get married. The man dies in 2004. Unfortunately, the man never updated his will. At her husband’s death, the woman claimed her elective share as a wife (one-third of the total estate) rather than abiding by the terms of the will. The man’s children from his first marriage objected. The court could decide that the surviving spouse is limed to $10,000.00 from the estate.

The following is 10 life changes that have the potential to affect your estate and would indicate the need for a revised Will:

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Domestic goddess Nigella Lawson recently hit the headlines with her declaration that she intends to leave her entire fortune to various charities rather than bequeath any of it to her children. Her 64-year old partner, Charles Saatchi, takes the polar opposite view and believes that his and Nigella’s combined three offspring from previous marriages should inherit the lot, currently estimated at £110million.

Whatever resolution the two finally agree to their disagreement, it has brought into focus the fact that charities benefit greatly from the proceeds of many people’s estates. Whether or not you agree with Ms. Lawson’s philosophy of letting the kids ‘do it for themselves’, leaving a legacy to charity is definitely a very noble action.

One of the most notable charitable legacies in the UK is the Wellcome Foundation, formed using the fortune of Sir Henry Wellcome after his death in 1936. However, many modern billionaires are not waiting until they die, but instead have decided to distribute their fortunes to charities whilst still alive, prompted by the decision of Bill Gates. The Microsoft chairman has set up a $7billion foundation which aims to close the considerable health and education gaps between Western and third world countries.

But, whilst billionaires can set up their own charitable foundations there are scores of existing worthwhile charities that constantly need funding. Charities derive a significant amount of their income from bequests and it’s not just multi-millionaires or billionaires that provide charitable legacies; many ordinary folk like to leave a portion of their accumulated wealth to charity following their death. Indeed, many smaller contributions soon add up and it is those donations that can often mean the difference between charities carrying on their good work or being forced to give up.

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Over the years in my work planning for affluent clients, I have often recommended the use of a corporate trustee. It is not common that a client’s initial decision regarding the trustee often is the eldest or most responsible or successful child or grandchild. There is often a notion in the client’s choice that there is some honor or distinction associated with naming a loved one as trustee, but upon a further understanding of the complexity of the issues and the work involved with acting as a proper trustee, the client recognizes the value and strategic logic of choosing a corporate trustee.

Some may ask, what is the typical threshold when a corporate trustee is right for a client? This obviously must be handled on a case by case basis, but as a general rule of thumb when a client’s net worth is above $1,000,000 (a common minimum asset requirement for corporate trustees), the benefits and cost of utilizing a corporate trustee far outweigh any potential negatives and the burdens placed on a loved-one forced to sit in the trustee position based on an improperly held notion or idea.

In every conversation with our clients we present the following six reasons why a corporate trustee should be considered when the total value of assets exceeds $1,000,000. The client is often shocked to see how quickly their assets can total a million dollars because in an estate planning sense you must include the value of your home, life insurance polices, IRA’s, and investments. Additionally, many financial professionals are aware that advanced planning strategies become necessary as assets approach the 2008 annual estate tax exclusion limits of $2,000,000.

Six Reasons to Consider the Use of a Corporate Trustee.

1. Complex Trust Law and Frequent Trust Litigation.

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Dispersing inheritance property can be a complex and complicated process. There is paperwork to file, taxes to pay and occasional family disputes to contend with. Matters can become even more complicated if a person dies without leaving a Last Will and Testament. The decedent’s estate can be tied up in probate court for quite some time, leaving heirs responsible for upkeep on real estate property, outstanding debts and taxes. Not to mention attorney fees and court costs.

Even if inheritance property is listed in a Will, it must still go through the probate process in order to ensure its validity. If no one contests the Will, inheritance property is usually tied up in the Probate Court system for a minimum of six months. During this time a Probate Judge reviews the decedent’s estate, notifies beneficiaries and verifies assets. If there are outstanding debts, creditor or tax liens associated with the estate, they must be paid prior to disbursement of inheritance property.

The best way to prevent your loved ones from having to jump through hoops to obtain the inheritance property you wish to leave them is to setup a Revocable Living Trust and execute a Last Will and Testament. Property transferred to a living trust is exempt from the probate process and can quickly be distributed upon your death.

Unfortunately, the vast majority of people procrastinate when it comes to preparing for death. While it’s understandable that people don’t want to think about dying, it’s important to realize the unnecessary burdens lack of planning places on loved ones.

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Legacy & Estate Planning allows clients to address their values, finances and legacy plan progress. For most professionals and entrepreneurs the importance of proper estate planning need not be stressed. When you hear the term estate, it refers to everything that you have worked hard to accumulate. Your home, real estate, bank accounts, stocks, bonds, mutual funds, cars, life insurance, business interests, artwork and jewelry. Without proper planning and based on the amount of total assets that you own there could be a hefty tax bill to upwards of 55%. Additionally, your beneficiaries may also be delayed and inconvenienced with all of the requirements in settling your estate.

When you arrive at the important decision to hire an estate planner you want the best for your family. You will have to consider if you want a traditional estate planner who only focuses on the hard numbers and physical assets or would you prefer a holistic counselor who also incorporates legacy development and planning into the process. Conscientious adults make an effort to bank with the best, invest with the best and associate with the best. When seeking to hire a planner the qualities you need to look for include the following.
Trustworthiness
The sensitivity of your personal financial matters dictates that you need to have a high level of trust in the counselor who assists you with planning. Most high net worth individuals utilize a team approach that includes their accountant, their financial advisor and an estate planning attorney. Each of these professionals typically are competent and knowledgeable and have earned the clients trust over time and through reputation. The importance of using the team is that most already have these separate advisors in place, in order to keep an orderly ship, communication and collaboration is stressed so that all goals can be working simultaneously toward similar objectives. A separate approach often leads to undesired inefficiencies.
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