Estate Planning

The estate planning landscape changed dramatically in 2001 with the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (Tax Act). The centerpiece of the Tax Act was the repeal of the estate tax. Unfortunately, a number of phase-in provisions dramatically increase the complexity of the new law and ensure that long-term planning by taxpayers will be more difficult. An estate tax sunset provision and limited AMT relief may reduce the long-term benefits of the Tax Act for many taxpayers.

Until the estate tax is fully repealed, federal and state transfer taxes will continue to be imposed on the value of an individual's estate when he or she passes away. A certain amount of assets are allowed to pass tax-free to the next generation ($2,000,000 in 2007 and 2008; $3,500,000 in 2009), but the transfer tax is imposed upon the value of the estate above that threshold at rates that can reach as high as 45% for 2007.

The imposition of transfer taxes clearly affects the amount of property passing onto one's heirs. Funding such tax liability may also present a financial burden. As the estate tax is phased out, however, planning for succession and payment of tax liabilities will present a moving target to taxpayers and their advisors.

Everyone has some type of estate plan. In the absence of a will, trust or other estate planning document, state law will govern the manner in which your assets pass to the next generation. Thus, by default, your estate plan will be based on state statute. The goal of our estate planning process is to enable assets to pass to the next generation in accordance with your specific and unique desires, and to the maximum extent possible. The starting point in this process is a review of your current estate plan, and the impact on your estate or family of federal taxes, income taxes, and administrative expenses.

Trusts often play a key role in estate planning. However, a thorough understanding of one's fiduciary obligations with respect to trust assets is essential. State laws governing trust accounting and operations, as well as the impact of the tax statutes, add to the complexity. We work closely with trustees to ensure that trust assets are properly accounted for, and that the trustee's obligations with respect to financial and income tax reporting are fully satisfied.

Estate planning is one of the building blocks to a comprehensive financial plan. As with other aspects of such planning, it requires development, implementation and follow up. Such planning is a dynamic process; we strive to work with you to ensure that your plan remains current as your lifestyle and fortunes change.