Who needs a trusts and estates attorney? With the federal estate tax exemption now $5,490,000 and portability of the exemption between spouses, fewer and fewer people pay the estate tax.  So why bother?  Can’t any attorney prepare your Will?  This article highlights the value that having a trusts and estates practitioner on board as your trusted family advisor brings to you and your family over the long term.  Is it worth it?  I will take you through the life cycle and show you where the wise counsel of a high quality trusts and estates practitioner adds value along the way.

            You are born.  Congratulations!  I am speaking with your grandparents about making annual exclusion gifts to you.  The annual exclusion gifts are gifts of up to $14,000 from any donor to any donee, and these gifts don’t count towards the donor’s lifetime gift tax exemption.  Your grandparents can set up Uniform Transfers to Minors (“UTMA”) accounts for you, where you receive the money at age  21.  They also can set up UTMA Trusts.  And finally, they can establish 529 educational accounts.

            You turn 18 and you are legally an adult.  I am discussing preparing a will for you.  If you “come into money” at 18 due to a trust termination, I am encouraging you to set up a trust for yourself, so that you will receive the funds at a more appropriate age.  You also may start receiving “crummey notices” from an insurance trust where you are a beneficiary; I am discussing this with your parents.  I am also discussing with your parents how and when they should tell you about family wealth, without destroying your career incentive.

            You get engaged!  We discuss the dreaded pre-nuptial agreement.

            You are newly married.  This is your first marriage, and we prepare wills for you and your spouse.

            You become a parent.  We prepare new wills for you and your spouse, where we incorporate trusts for your children and appoint guardians for them should you and your spouse pass away while they are minors.  We might also be discussing whether you need life insurance, to take care of the family if one of you passes away, or perhaps a second to die policy to take care of the children if both of you pass away.  We might be setting up a life insurance trust that would own the insurance, to protect the proceeds from estate tax.  We also consider the issue of annual gifting to your children.

            The children are growing—and one of them has special needs.  We prepare new wills for you and your spouse, where we address the need for a supplemental needs trust for the disabled child.  This trust will allow the child to continue to receive government benefits throughout his or her life, even though there also are substantial assets in trust for his or her benefit.  We might be discussing purchasing life insurance at this juncture as well, if there are insufficient assets to provide for the special needs child as well as your other children. 

            You are ambitious and start a business!  We address the ownership structure.  Should you form an LLC?  Is a partnership a better choice?  We discuss the options.  We are involved with the creation of a partnership agreement, LLC operating agreement and/or buy-sell agreement.  There are important issues that relate to estate tax valuation of your interest in the business, how the business would carry on after your death (succession planning), and how your family would realize value from your ownership interest after your death that must be considered.  We also discuss gifting of shares of the business, when it is still small, to your children or trusts for their benefit.

            Your children are grown.  You notice a multitude of problems in families of friends and perhaps in your own: the overbearing son-in-law or daughter-in-law, divorce of a child, a spendthrift child, a drifting child, a psychotic child, an irresponsible child, or a child too trusting of others.  You may revise your will to keep all assets in trust for the next generation.  You may create trusts for the grandchildren as well.

            You get divorced.  We revise your will for obvious reasons.

            You get re-married.  We discuss the pre-nuptial agreement.  We discuss how and whether to provide for the new spouse in your new will.  We prepare your new will and may also prepare a new will for your new spouse.

            Your health is failing, but you have an actuarial life expectancy of more than one year.  We discuss gifting strategies to reduce estate taxes. 

            You die.  We administer your estate.  We also can assist in administering trusts under your Will if you have not chosen a professional trustee.

            When preparing your wills and lifetime trusts, we also prepare the ancillary documents. These include the power of attorney (where you appoint someone to manage your financial affairs), the living will and the health care proxy (where you appoint someone to make medical decisions for you if you are unable to do so).

            Some Americans live abroad but maintain assets in the United States.  Some foreign persons who live abroad keep assets in the United States, as our country is viewed as a safe haven.  We are sometimes relied upon by clients living abroad to assist with trusts and financial matters in the United States.  Nina has also acted as a U.S. executor of a European citizen and resident who died leaving property in New York State.

            We typically work with the client’s other advisors, such as attorneys who practice in other legal specialties or in other states, accountants, financial advisors and insurance brokers. 

            Having a trusts and estates attorney in your corner adds value at many points through the life cycle.  So who needs it?  Every family of means should have a trusts and estates practitioner who they can use as a sounding board, who knows multiple generations of the family, who is the “family counselor” and who can provide high quality service and responsiveness with respect to financial and family issues that arise throughout your life.