Where Do I Start With Estate Planning?

Where Do I Start With Estate Planning?

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Estate planning can start at almost any stage of life. You can start with estate planning when you are young, you can start with estate planning in your middle years, or you can start with estate planning in your elder years. Of course, the better practice is, the earlier you start. If you start earlier, things will change over time. There are going to be changes in your family structure, changes in tax laws, changes in what your desires are, and changes in your income and assets. Those have to be taken into account when you start earlier because you will more likely than not modify your estate plan over time. The benefits of starting early are not necessarily outweighed by the costs of having to make changes to your estate plan going forward.

For instance, if you start younger and establish an estate plan which includes a life insurance policy that might be held inside a Trust for your children or minor children, and if it’s appropriately structured, then if something were to happen to you (god forbid) while the children were still young, the money would be completely protected. A lot of times, people think that if they just have a life insurance policy for their children and one or two million dollars, then the children will be set for life. However, that doesn’t always turn out to be the case.

Sometimes you have what we call “millionaire minors” that grow up without parents, they grow up a little bit wild, and they still haven’t found themselves by the age of 18. Suddenly, they come into a couple of million dollars, go on a huge spending spree, and blow all the money. Alternatively, someone could take advantage of them or take romantic advantage of them by telling them that they have to invest in a business they are starting. Of course, they are going to do it, and then suddenly the money is gone and so is the romantic interest. Or, they could get involved in a marriage that turns out poorly and the future ex-spouse ends up taking half the money. There are ways of protecting that so that your minor children can be set for life. For instance, if you were to create a Trust while the children are young, you could make it so that the Trust requires a prenuptial agreement in order for it to continue to pay when they get married. They wouldn’t have to worry about a romantic problem and they would be required to get a prenuptial agreement, which basically says that no assets of the Trust are going to belong to the spouse in the event of a divorce.

The Trust can also basically have the few million dollars it’s paying out of the life insurance policy and you can make it an income for life. Instead of the child having to worry about what job they are going to get or whether or not they will be successful in their job, they will have a steady stream of income that’s going to come out of those one or two million dollars and it can be completely protected against creditors. If they happen to be a spendthrift, they will only be able to spend the income from the Trust and not the assets from the Trust that will be protected against creditors in case they are acting up, even against bankruptcy.

Starting early while you have young children and putting the money up front that you are going to put into a life insurance policy into a Trust changes the entire game for your minor children in the event that something happens or both parents get into a car accident, and then the children have no parents growing up. If you are in your middle years and starting to accumulate assets and you don’t want to part with them but you want to somehow protect them in the event of a disaster, then you could set up a Revocable Trust. A revocable Trust gives you complete control over all of the assets during your lifetime and it instantly becomes an irrevocable Trust with all of the protections associated with that upon your passing. If you die early, then your spouse would be completely protected with a Revocable Trust.

People who are approaching their retirement years or beyond and who have assets that they want to preserve in their retirement may have accumulated more assets than they need in their remaining lifetime, and they may want to pass those on to their children. Through a series of Trust structures, depending upon the extent of their assets, a lot of things can be protected. We can protect against capital gains in a lot of instances and allow for a full step-up basis upon your passing, whereby we can carve out various chunks of assets (whether those are physical assets or monetary) and pass them on to the next generation or to the grandchildren. Depending upon the size of the estate, we can do this while avoiding estate taxes and various other types of risks and costs.

Estate planning should start now because we can usually structure something that is going to fit within your existing lifestyle, your existing asset base, your existing income, and your existing desires. If there is a need to modify it over time, we will modify it over time. If something were to happen in the interim, then everything would be completely protected and passed on the way you would like it to be passed on.

At my firm, I get clients that are of various different ages. I have young couples come in that are pregnant and want to set something up for their baby, and I have middle-aged clients who want to figure out in the next few years how they are going to be able to pass on the business they’ve created to their children. I have seniors who have accumulated small amounts and seniors who have accumulated large amounts over their lifetime, and they are looking for the best and fairest way to pass it on to their children and grandchildren. Sometimes they are trying to avoid conflict and sometimes they will carve it up in different ways so that it’s fair but still preserves the functional assets. I have a lot of experience in this area and love to work with new clients who have an interest in securing their estate.

For more information on Estate Planning in Long Island, Nassau County and Suffolk County, a FREE phone consultation is your next best step. Get the information and legal answers you are seeking by calling (516) 806-0762 today.

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