Trust and Estate Planning

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What is Trust and Estate Planning?

Everyone has an estate and should have a plan in place to protect their assets and family when they are unable to. Your estate includes everything you own including physical assets, intangible items (such as digital assets, insurance, and savings), and even your debt obligations.

Estate planning is the process of outlining in advance the people or organizations who will receive your assets and the management of how those assets will be received. It is also your opportunity to establish your wishes for how and by whom your minor children might be cared for. An estate plan typically involves planning and documentation including:

  • Wills
  • Trusts
  • Power of Attorney for Health Care and Financial Power of Attorney
  • Advanced Healthcare Directives

Why is it Important to Have an Estate Plan?

Sometimes people think an estate plan is only for high-net-worth families, but that is not the case. To minimize taxes and ensure a smooth asset transfer, you need documents in place. It is not just at death that estate planning matters, incapacity is a concern as well.

It also includes planning for:

  • Minimizing taxes and court and legal fees
  • Providing for your minor children
  • Transferring your business when you retire, become incapacitated, or die
  • Instructions for your financial and physical care if you become incapacitated
  • Arrangements if you require long-term care or are disabled
  • Providing for special needs family members or loved ones
  • Transferring assets to loved ones with protections against irresponsible financial behaviors or future divorce

How to Create or Update Your Estate Plan

Your estate planning team should at least include a tax professional, an estate planning attorney, and a financial advisor. It may also include others such as valuation experts or insurance professionals. This advisory team will work together to ensure you have an estate plan that reflects your current and future needs. There may be some overlap in the responsibilities with this team of advisors. However, each still has their own expertise and together will provide the best deliverables for you and your family.

Start by selecting a quarterback for your advisory team. Reach out to the advisors you already have experience with as they likely have recommendations for you. If you are not receiving the service you desire, now’s the time to try a new approach. Ask your friends and family if they work with someone they could refer you to. Interview your team to make sure you are comfortable with their process and experience.

Once you have assembled your team, the process should follow these steps:

  1. Consideration of your goals and objectives for your estate needs with an understanding of your current and future financial picture
  2. Review of any current estate documents
  3. Development of strategies to make changes to plans or establishment of new plans to align with goals
  4. Drafting the required documents
  5. Funding and implementation of any documents drafted
  6. Repeat for significant life or law changes

Trust & Estate Planning With an Eye to Bidens Administration.

Biden’s administration is discussion potential updates to estate tax that may impact your estate and trust plans. The current lifetime exemption is $11.7 million. SVA is monitoring these potential updates and will continually update the information as it is released.

Check out our newest article: Trust & Estate Planning 2021 With an Eye to Biden’s Administration.

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When you created your estate plan, you probably stored the documents in a safe place and put them out of your mind. As your life moves on, your estate plan should also be adjusted for those life changes. Because an estate plan involves designating beneficiaries, legal roles, asset distribution, and medical and financial care instructions, the plan should occasionally be reviewed. SVA will review your existing plan and help you adjust as needed to accurately reflect your current goals and wishes. We can also liaise with your other advisors, such as with your attorney, to make the draft of any new documents a smooth and efficient process.

For gift and estate tax purposes, the fair market value of the property transferred to another party is generally measured on the date of the transfer based on the “willing-buyer, willing-seller” test. Assets without a readily ascertainable value must have the value determined using methods recognized by taxing authorities and courts to validate the price. SVA assists clients through all phases of the valuation process including audit and tax court proceedings. We work directly with the client’s attorneys and estate planning professionals to resolve issues that arise including valuation discounts and premiums, pass-through entity and built-in gains tax calculations, and issues related to Family Limited Partnerships (FLPs) or LLCs. Understanding the “tax” value of what is in your estate is important to assess the gift, estate, and generation-skipping transfer tax exposures. It is also important to the development of a cohesive wealth transfer plan.

Philanthropy and supporting nonprofit organizations are the cornerstone of many estate plans. To make the most of your charitable giving funds, both during your lifetime and after your death, you will want the advice of a tax expert who understands your goals as well as the best way to minimize your tax obligations.

These strategies may include:

  • Bunching deductions
  • Using a donor-advised fund
  • Donating appreciated assets
  • Donating a portion of your IRA

The options will depend on your personal situation, tax bracket, income, etc. SVA will take the time to understand your goals and develop a tax-advantaged solution to help you meet this critical objective.

Estate planning and succession planning must go hand in hand for a successful transition of your business. Succession planning identifies who will take over the company, while estate planning involves determining the distribution of your assets through gifting strategies, wills, trusts, etc. It is critical to undertake both succession and estate planning together to minimize transaction costs on the transition of your business and potential associated gift, estate, and generation-skipping transfer taxes down the road.

Do you have both a clear succession plan and a well-documented estate plan? And are the two compatible in every respect? To make sure you can answer “yes” to both of these questions, please contact us. SVA can help you develop plans that will distribute your assets per your wishes while putting your company in the best position to succeed going forward.

The final step in estate planning is settling all aspects of the estate. There can be many administrative tasks and issues to deal with when the family is coping with the loss of their loved one. That’s where SVA can help. We can guide you through the process of valuation and inventory of assets, disclaiming assets, funding trusts, and transferring assets. As you develop your estate plan, include a plan to settle the estate when the time comes. We can customize our estate settlement services to meet your needs.

Resources

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Estate Planning Inventory Workbook eGuide

This eGuide explains what estate planning is and why it is so important.

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The Role of Estate Planning in Your Business Exit Strategy eGuide

This eGuide explains how estate planning is to consider when planning your business exit strategy.

Professionals

EG Schramka

E.G. Schramka

CPA, JD, ABV, PFS, CIRM

Richard Kollauf

Richard J. Kollauf

CPA, CFP®, AEP®, JD

Awards and Affiliations

Forbes Names SVA as 2021 America's Best Accounting Firms
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Locations

Madison, WI
1221 John Q Hammons Dr, Suite 100
Madison, WI 53717
(608) 831-8181

Milwaukee, WI
18650 W. Corporate Drive, Suite 200
Brookfield, WI 53045
(262) 641-6888

Colorado Springs, CO
PO BOX 62786
Colorado Springs, CO 80962
(719) 413-5551

Contact

(888) 574-4782
info@SVAaccountants.com
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