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 Estate
Planning Takes Center Stage
For many years, estate
planning has been a balancing act between leaving a lasting legacy
for heirs and reducing or eliminating estate taxes. Recently, the emphasis seems
to be shifting toward leaving a legacy to family members. Yet many people are
still concerned about instilling the value of something earned rather
than something given.
Warren Buffett crystallized this perspective when he described the perfect inheritance as
"...enough money so that they [family] feel they could do anything, but not
so much that they could do nothing."¹
Here are some of
the strategies people are using to help carry out their estate plans.
Trusts
Utilizing a trust, an individual can implement plans to
determine not only how much the family members' inheritance will be, but also
when and under what conditions they will receive it. A trust can be structured
to distribute the bulk of the inheritance once a child reaches a certain age. It
can also require that certain conditions are met before the inheritance is
received — such as having the recipient demonstrate an ability to earn a
living, manage money, or achieve an education.
Because a
properly structured trust is not subject to probate, it can help shield heirs
from unwelcome solicitations and maintain the estate's privacy.²
 Life
Insurance
The proceeds from a life insurance policy can be used to help
pay final expenses and estate taxes, as well as provide funds to pay the
family's living expenses or meet specific goals. This can help ensure that
estate assets won't have to be liquidated to pay taxes or fees. Life insurance
proceeds can even be used to fund the trusts that transfer an inheritance.³
Leaving a lasting
legacy for family members may involve a number of estate planning strategies.
Taking steps now and reviewing them regularly can help ensure that your wishes
will be carried out.
1) Advisor
Today, October 2003
2) The use of trusts involves a complex web of tax rules and regulations.
Be sure to consult your legal, tax, and estate advisors before implementing such
strategies.
3) The cost and availability of life insurance depend on such factors as
age, health, and the type and amount of insurance purchased. Before implementing
a strategy involving life insurance, it would be prudent to make sure that you
are insurable by having the policy approved.
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