Advisor for Life by Stephen D. Gresham

Author:Stephen D. Gresham
Language: eng
Format: epub
Publisher: Wiley
Published: 2010-12-27T16:00:00+00:00

Estate Planning and Advance Directives

By now you’ve realized that my intent is to frame the various components of life advice for your practice, much as a builder might frame a house. Similarly, my treatment of estate planning is merely a framework. I am not an attorney, and I would be out of my league if I attempted to describe the nuances and legal details of a comprehensive estate plan. But estate planning is critically important for your clients, and it’s essential that an Advisor for Life understands estate planning basics so that she can confidently initiate a discussion and remain central to the solution process.

The key issue in estate planning concerns how the client wants to be remembered. Lawyers, accountants, and financial experts can make sure a client’s wishes are carried out most effectively and efficiently, but clients may need assistance clarifying what their wishes are. Your discussions with clients about their legacies may lead to the topic of trusts, one of the legal structures used to carry out legacy wishes, often with the purpose of minimizing the tax consequences of bequests. Many types of trusts are available, but they can be complicated and expensive to create and maintain. Only by carefully studying an individual’s estate planning issues can the proper trust strategy be devised.

Trusts generally are either revocable or irrevocable. A revocable trust can be changed or canceled anytime after it is established. The federal government considers the assets in a revocable trust to be under the grantor’s control, so income taxes must be paid on any revenue the assets generate. Estate taxes may be due on remaining assets at death.

An irrevocable trust cannot be altered or canceled once created. Assets placed into an irrevocable trust are permanently removed from one’s estate. As this trust is considered a separate entity, any appreciation of its assets is not considered part of an estate, thereby eliminating estate tax liability.

Become familiar with the estate planning resources your firm or vendors may offer. At the same time, establish relationships with leading estate attorneys in your area. Big changes in the tax laws seem to be an annual event, and major estate tax changes are scheduled for 2010. Prepare yourself.

While estate plans are critically important to affluent families, a recent Phoenix Wealth Survey found that only 32 percent of millionaire households have an estate plan created within the past five years. If legacy issues are not enough to overcome client inertia in this area, here’s a hot button that is likely to trigger action: advance directives, or the legally binding documents executed by currently competent individuals to establish the medical treatments they would want should they become incompetent. Do your clients have a living will or a health care proxy, the two primary advance directives? The Patient Self-Determination Act of 1991 encourages patient involvement in life-sustaining treatment decisions by providing patients with the right to refuse any and all medical interventions—even life-sustaining ones—if the proper documentation is in place. A living will usually permits

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