General Approach to Estate Planning

8655 Via de Ventura, G-221 • Scottsdale, Arizona 85258
Ph. (480) 991-0803 • Fx. 480-991-0787

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General Approach to Estate Planning

At our firm, we emphasize client communication and education. Estate planning is not concerned only with what happens at your death, it should be integrated with your financial planning as well. We consider such things as your investment portfolio, whether you have an ownership interest in a small business, potential inheritance, how you hold title to your assets, size and type of retirement plans and insurance coverage. If you have a financial planner, accountant or other trusted advisor, we will work with your other advisors so you get a true team approach.

Meetings

Usually there will be at least three meetings with the client:

Information meeting. This is the initial meeting and it enables the attorney to:

understand the client’s concerns, wishes and problems (provision for spouse; provision for children/grandchildren/others; special bequests; incapacity)

obtain a general understanding of the size and composition of the estate;obtain marital history, present family and heirs explain options. In addition, it enables the client to ask questions concerning the law and choices available.

Planning meeting. This occurs after the attorney has received and analyzed the client’s information and is used to present the attorney’s recommendations and client’s decisions.

Document meeting. This is when the actual documents are signed and executed.

Concepts

INTESTACY: the rule of law which provides for distribution of a decedent’s property when that person dies without a will.

PROBATE: The legal means by which a decedent’s property is passed to the heirs.

TRUSTS: Arrangements which feature a Settlor (the person who establishes the trust and transfers assets to it), a Trustee (person who holds and manages the trust property and distributes it in accordance with the trust instrument) and a Beneficiary (person who will receive some benefit from the trust, now or in the future). There may, and often are, more than one of each of these parties provided for in the trust instrument.

GIFTS: The lifetime transfer of property for less consideration than the property is worth or no consideration. Gifts may be given on account of love and affection, such as to family members, or because of charitable or religious motivation. In larger estates, a gifting program may be designed as a tax planning tool.

ASSET PROTECTION: Asset management which has as its feature the preservation of wealth, often involving protection against creditors or even against the owner himself.

LIVING WILLS: Medical directives to hospitals and care givers telling them under what circumstances extraordinary medical intervention should be discontinued.

ESTATE AND GIFT TAX: A federal tax on the value of assets transferred by gift or upon death. When applicable, tax rates start at 37% and increase to 55%,

COMMUNITY PROPERTY: recognized in Arizona and a few other states and holding that a husband and wife form a community and each hold an undivided one-half interest in most property acquired during marriage.

PROPERTY GENERALLY NOT PASSING UNDER A WILL

Insurance Policies
Retirement Benefits
Joint tenancy or community property with WROS
Joint bank and brokerage accounts
Property in trusts

SPECIAL CONCERNS

Prior wills
Closely held business/farm
Foreign property or property in other states
Education/Minor Children

Estate Planning Devices - A Glossary

"AB" OR UNIFIED CREDIT TRUST: An "AB" trust is a living trust which divides into two pieces upon the death of a spouse. The "A" share goes to the spouse, either directly or in the form of a trust. This is designed to take advantage of the unlimited marital deduction. The "B" share is designed to avoid inclusion in the estate of the surviving spouse and will eventually be distributed to beneficiaries other than the surviving spouse.

"QTIP" TRUST: A type of marital trust which qualifies for the marital deduction.

IRREVOCABLE LIFE INSURANCE TRUST: A trust which owns a life insurance policy (and may own other property as well) and which is designed to avoid taxation in the Settlor’s estate.

FAMILY LIMITED PARTNERSHIP: A limited partnership used to manage business interests and investments in which the partners are family members. The limited partnership agreement defines the roles and responsibilities of the general and limited partners. Often used as a property management tool for wealthy families.

"QPRT" TRUST: A qualified personal residence trust which is designed to remove a personal residence from an otherwise taxable estate at a discounted value.

CHARITABLE REMAINDER AND LEAD TRUSTS: Trusts which benefit both charitable organizations and one or more non-charitable beneficiaries. If designed correctly, they may avoid estate tax, provide an income tax deduction and support the donor or a relative of the donor as well as a charitable, religious or educational institution.

TRUSTS FOR MINORS: A special trust designed to qualify for the annual gift tax exclusion of $10,000 or a trust established under a state’s Uniform Transfers to Minors Act statute.

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