Estate Planning Services

Estate Planning allows you to decide while you are alive how your assets will be distributed. With additional planning, you can also protect all or some of your assets from a nursing home. Some of the most common areas that we discuss with our clients include:

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Estate Planning:

What is it and why do we do it?

You spend your entire life creating wealth. The more wealth you create the more unhappy the people you leave behind will be without the proper estate planning. Estate planning allows you to decide while you are alive how your assets will be distributed. It also allows you to protect your heirs from unanticipated devastating expenses ranging from debts to taxes to administrative fees. Court and probate records show 75% of all estates do not have the necessary cash to pay for these expenses. Heirs are forced to quickly liquidate assets such as homes and businesses to pay these expenses, often at a fraction of their real value. If people didn't care about taking care of loved ones after they're gone, no one would bother completing an estate plan.

Our discussion will explore:

  • Wills
  • Executors
  • Probate
  • Estate Taxes
  • Trusts
  • Life Insurance

The material presented on our web site may contain concepts that have legal, accounting and tax implications. It is not intended to provide legal, accounting or tax advice, you may wish to consult a competent attorney, tax advisor, or accountant.


Everyone who is concerned how their assets will be divided should at the very least have a current and valid will. 

The will should:

  • Provide a description of your assets.
  • Provide for the distribution of your assets to your heirs.
  • Name an executor.
  • Name a guardian for your children.

Wills are simple to create. Though you should always have it done by a qualified attorney, many courts have accepted simple handwritten wills drawn up without any legal counsel. Some states even accept oral wills.

Wills may be simple, but after death, they become a public document once they are entered into court. They instruct the court of your wishes. A will can be contested and it is up to the court to decide validity. Legal counsel may help you avoid many of the pitfalls associated with wills, especially in the area of contestability.

After death, wills must be brought before the courts. This process is called probate. This process could take from 9 months to 2 years or longer, and could cost 2% and sometimes up to 5% of the entire estate.

If the value of an individual's assets are high enough to be subject to estate taxes, wills do not help with estate taxes.


In most instances, when a person dies owning property of any real value, it is necessary to appoint someone to administer the estate. That someone could be an individual close to the deceased, a bank or trust. That individual who acts for, or "stands in the shoes of," the deceased is called the personal representative. If the personal representative is named in a will and the will is accepted as valid that person is known as the executor.

To carry out the administration of the estate, the executor is responsible for:

  • Contacting the funeral director, cemetery and clergy to make burial and funeral arrangements.
  • Notifying relatives, friends, employer, post office, insurance agents, civic organizations, veteran organizations, newspapers, attorney and accountant.
  • Collecting all documents and important information related to the deceased:
1. Will 7. Insurance Policies 13. Veteran Discharge Papers
2. Death Certificate 9. Bank Accounts 14. Disability Claims
3. Birth Certificate 9. Deeds 15. Unpaid Bills
4. Marriage Certificate 10. Leases 16. Property Tax Bills
5. Socical Security Number 11. Car Titles 17. Credit Card Information
6. Citizenship Papers 12. Income Tax Returns  
  • Depending on the value and complexities of the estate, hire lawyers, accountants, appraisers and if there is a business involved the necessary people to keep it going.
  • Filing the necessary tax returns and paying the appropriate estate, federal and state income taxes and paying all debts and expenses.
  • Distribute assets in accordance with the will.


Probate is a legal process where your executor goes before a court and:

  • Identifies the property in the estate.
  • Has the assets appraised.
  • Pays all debts and taxes.
  • Proves the will is valid.
  • Distributes the assets according to the will
The pitfalls of probate:
  • Time consuming. It could get bogged down in the busy courts and take a year or two, while your heirs wait.
  • Costly. If the estate consist of non-cash assets such as real property, art, coins, or long term bonds they will need to be sold to pay for probate costs. That involves appraisal fees, additional delays and selling property you intended for your heirs. Plus, often that property is sold below market value.
  • Multiple probate. If property is in more than one state, each state requires separate probate proceedings.
Can probate be avoided?
  • Probate is not necessary if all of a person's assets will pass automatically under joint ownership.
  • Probate may not be necessary if the only asset is life insurance payable to a beneficiary.
  • Probate is not necessary for assets that have a beneficiary designation such as IRA's, and employee benefits such as pension plans or profit sharing plans.
  • Assets placed in a trust usually do not have to be probated because the assets are payable to named beneficiaries.

Estate Taxes

The federal estate tax, initially adopted by Congress in 1916, is tax on the right to transfer property at death. The Tax Reform Act of 1976 revised the federal estate tax to be a tax based on the value of all property and rights to property possessed by a decedent at his death or transferred by him by gift during his lifetime.


  • Unlimited Martial Deduction: Property transferred at death from one spouse to another is excluded from estate taxes.
  • Annual Exclusion: An individual can gift any number of other individuals $11,000 each year without incurring a transfer tax.
  • Unified (Lifetime) Credit: Each person is allowed lifetime credit. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA 2001), signed into law by President Bush on June 7, 2001, repeals the estate tax for one year. Under the new law, the federal estate tax continues, but with increasing unified credits and decreasing top estate tax rates, until 2010 when it is repealed only for one year. Without future Congessional action, the 2001 federal estate tax rules will be reinstated in 2011, but with a $1 million exemption equivalent.
Year of Transfer Exemption Equivalent Top Estate Tax Rate
2002 $1,000,000 50%
2003 $1,000,000 49%
2004 $1,500,000 48%
2005 $1,500,000 47%
2006 $2,000,000 46%
2007 $2,000,000 45%
2008 $2,000,000 45%
2009 $3,500,000 45%
2010 Repealed Repealed
2011 $1,000,000 55%
Estate Tax Table    
Taxable Estate 2002 Tax (assumes max. credit) Marginal Tax Rate
$1,000,000 $0 plus 18% over $1,000,000
$1,010,000 $1,800 plus 20% over $1,010,000
$1,020,000 $3,800 plus 22% over $1,020,000
$1,040,000 $8,200 plus 24% over $1,040,000
$1,060,000 $13,000 plus 26% over $1,060,000
$1,080,000 $18,200 plus 28% over $1,080,000
$1,100,000 $23,800 plus 30% over $1,100,000
$1,150,000 $38,800 plus 32% over $1,150,000
$1,250,000 $70,800 plus 34% over $1,250,000
$1,500,000 $155,800 plus 37% over $1,500,000
$1,750,000 $248,300 plus 39% over $1,750,000
$2,000,000 $345,800 plus 41% over $2,000,000
$2,250,000 $448,300 plus 43% over $2,250,000
$2,500,000 $555,800 plus 45% over $2,500,000
$3,000,000 $780,800 plus 49% over $3,000,000
$3,500,000 $1,025,800 plus 50% over $3,500,000


A trust is the holding of property and the equitable management of that property by one person (a trustee) for another person (a beneficiary). The person who transfers property into a trust is called a grantor. A Living Trust is called a Living Trust simply because it is created while you are alive. In most Living Trusts the grantors (Husband and Wife) are also the trustees.

Almost anything can be placed in a trust: bank accounts, stocks, bonds, real estate, personal property, and life insurance. Once the trust is established, assets can be placed into the trust by simply changing the name or title of the asset. If constructed properly the grantor can still maintain full control of the assets.

  • Living Trusts avoid probate. Because a trust is recognized as a separate legal entity, distributions are made by a Trustee to named beneficiaries without any court involvement.
  • Keeps the details of the estate private.
  • Gives the grantors (Husband and Wife) full control of their assets while they are alive and competent.
  • Allows assets to be distributed quickly upon death.
  • A Living Trust arranges for a successor trustee to manage the assets should the Grantor trustee become incapacitated.
  • A Living Trust is difficult to contest.
  • A Living Trust with "A-B Provisions" effectively doubles the standard estate tax deduction for married couples.

Life Insurance

Life Insurance can provide much needed cash to pay for fees and taxes and also allow for an easier distribution of all assets.

  • Life insurance proceeds at death are passed to the beneficiary income tax free.

Life insurance proceeds at death add to the value of the estate and therefore are subject to estate taxes. This can be avoided by having someone other than the insured own the insurance policy. This can be accomplished in two ways:

    1. The children of the insured can own the policy.

    2. An irrevocable life insurance trust can be created and funded by life insurance. The trust is irrevocable because the insured (Grantor) cannot have any rights or powers over the trust and no incidence of ownership over the life insurance policy.

Charitable Remainder Trusts (CRT)

In 1969 Congress created a new type of trust that helped charities and not-for-profit organizations generate more revenue for their causes. In addition to being an excellent vehicle to make a charitable gift or bequest, a charitable remainder trust is an effective estate planning and income tax reduction tool. This vehicle allows taxpayers to reduce estate taxes, eliminate capital gains, claim an income tax deduction, and benefit charities instead of the IRS.

A charitable remainder trust is established with irrevocable contributions of cash, marketable securities, closely held stock or real estate. The parties to the trust are the Donor, the Trustee, the Beneficiaries (also called the Recipients, and the Charitable Remainder Beneficiaries (Charity or Charities). The Donor contributes assets to the trust. The assets are typically sold and the proceeds reinvested by the Trustee. The Trustee makes payments for life or for a term (not exceeding 20 years) to the Beneficiaries according to the terms of the trust. At the termination of the lifetime interest (death of all primary beneficiaries) or the designated term the Trustee distributes the remaining trust assets to the Charitable Remainder Beneficiaries.




At the creation of the charitable remainder trust, the donor receives an income tax deduction for the present value of the future gift (the "charitable remainder") the charity will receive when the trust terminates. That value is calculated based on actuarial tables, taking into account the value of the property transferred to the trust, interest rates, the age of each beneficiary, or the term of the trust if it is for a specific number of years. If he or she cannot use the entire deduction that year, it may be used over the next five years.


Once the assets are inside the charitable remainder trust, there are no taxes from the sale of the assets transferred to the trust. Therefore, transferring appreciated assets to a charitable remainder trust, which in turn sells them and re-invests the proceeds in income-producing property, provides the trust the full value of appreciated assets without capital gains. The assets are removed from the gross estate of the donor and the recipient receives an income for life or for a specific term.


While the charitable remainder trust is an irrevocable trust, the donor under certain conditions can be the trustee as well as the beneficiary of the charitable remainder trust. As trustee he or she has control over the administration of the trust and investment of trust assets. That individual can name successor trustees or alternate trustees and can retain the right to change designation of trustee at any time.


At the establishment of the charitable remainder trust, the donor can name his or her self, a spouse, and/or others as beneficiaries. Those named primary beneficiaries will immediately receive the lifetime income. Those named contingent beneficiaries will receive payments only after the death of all primary beneficiaries. Once the trust is established, the designation of beneficiaries may not be changed. All beneficiaries must be living and named when the trust is established.

Lifetime Income Payments:

The charitable remainder trust is structured in one of two ways:

Payment Term:

In most cases, payments from a charitable remainder trust are made for the lives of the beneficiaries. However, you can also specify that payments be made for a fixed term of up to 20 years. An example for the use of this option could be to offset the cost of tuition (usually four to eight years) for a child or grandchild. Once the trust is established the payment term may not be changed.

Charitable Remainder Beneficiaries:

When the trust is established, the donor can retain the right to change the designation of the charitable remainder beneficiaries at any time. At the death of the beneficiaries or the end of the fixed term, the remaining assets in the charitable remainder trust will go the charitable organizations (Charitable Remainder Beneficiaries). The donor can specify how he or she wants the charity to use the money. For example, he or she can specify the money be used as an endowment with only the income from the assets be used by the organization. He or she can also specify for what charitable purpose the donation is to be used.

Frequently Asked Question:

What about my heirs? If the charity gets the asset my heirs get nothing? Answer: To insure the children?s inheritance stays in tact, some of the monthly income generated by the CRT can be used to purchase life insurance on the donor?s life. When the donor dies, the policy replaces the approximate value that was given to the charitable trust. The life insurance is purchased by an irrevocable life insurance trust to avoid incidence of ownership avoiding the death benefit being included in the donor?s estate.

The following is an example how a CRT works, the figures are illustrative and not exact:

John Hamilton and his wife, Joan, own an apartment building they bought for $200,000, 20 years ago. If they sold the building today for its market value of $1,000,000 they would have to pay approximately $160,000 in capital gains tax. They could conservatively earn 8% or approximately $67,000 per year in income on the remaining amount. When they die, because of all the other assets they own, their estate will be in the 55% estate income tax bracket. Their children would receive approximately $360,000 in inheritance on that asset. They decided to establish a charitable remainder trust. They donated the building to charity. The building was sold for $1,000,000. Their family income was approximately $400,000 annually. They were able to carry the income tax deduction earned by donating the building to charity for three years and saved approximately $100,000 in income taxes. Their income from the building at 8% is $80,000.  John and Joan are 60 years old and purchased a 2nd to die life insurance policy with an annual premium of $10,000.

Analysis: John & Joan were able to donate $1,000,000 to their favorite charity. They received a $100,000 savings on their income taxes by donating the building to charity. They earned more money in annual income on the asset and were able to pass on $1,000,000 to their children estate and income tax free.