Other
Areas to Consider
There are many other
changing circumstances that should be anticipated with flexible estate plan
design. These include qualifying for California Medi-Cal benefits through
authorizing the gifting
down of incapacitated individual’s estate; minimizing
income tax from distributions from an IRA
account made payable to a living trust; minimizing generation
skipping transfer tax for trusts
that become multi-generational; preventing contests
by disgruntled beneficiaries through properly drafted no-contest clauses; and minimizing
property taxes in scenarios where children receive an
interest in real property. In each of these cases, provisions can be put in
place which allow “escape hatches” or trusts to “spring” into place to account
for the change in circumstances.
No
Substitute for Good Planning
As we wrap up this series, remember that most
trusts—whether written by a lawyer or through an internet program—are not
written with the escape hatches and springing trusts described above. Because
of this failure of trusts, attorneys are often required to go to court to sort
out the problems which arise. Going to court usually increases the overall fees
and costs associated with estate
administration. This author recommends that individuals seek
out an estate
planning attorney who is knowledgeable about the above
strategies in order to effectively anticipate future problems.
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DISCLOSURE
UNDER TREASURY CIRCULAR 230: The United States federal tax advice, if any, contained in
this website and associated websites may not be used or referred to in the
promoting, marketing, or recommending of any entity, investment plan, or
arrangement, nor is such advice intended or written to be used, and may not be
used, by a taxpayer for the purpose of avoiding federal tax penalties.
