Estate Planning and Administration


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Estate Administration

Estate administration generally involves assistance to a court-appointed fiduciary in guardianships for a minor or incompetent adult or for a decedent's estate. Typically, our firm is retained by the fiduciary on an hourly basis for assistance on an as-needed basis, and we are pleased to assist as much or as little as possible as determined by our client.

The role of an attorney who represents a court-appointed fiduciary is a bit different than an attorney representing a client in other situations. In guardianship cases, the guardian has a fiduciary duty to represent the best interests of the minor or incompetent adult. In a decedent's estate, the fiduciary must represent the best interests of the estate and the heirs at law (or beneficiaries) equally. Therefore, an attorney who represents a court-appointed fiduciary represents that person in carrying out those duties, as distinguished from representing a client's personal interest.

Estate administration, whether for guardianships or decedent's estates, can be an unfamiliar and difficult experience. Even without regard to the inflexible and confusing legal procedures, acting in such a capacity is oftentimes a thankless and emotionally difficult task. It helps to have an independent and experienced resource available.


Estate Planning

Our estate planning includes the drafting of Wills, Trusts, Powers of Attorney and Living Wills, depending on our client's individual situation. Family dynamics, individual circumstances and wishes, and current financial condition will determine what documents are needed.

The Economic, Growth and Taxpayer Relief Reconciliation Act of 2001 provides incremental increases in the exclusion amount sheltered from federal estate tax. This exclusion amount was initially $1M for decedents dying in 2002 and is incrementally increased to $3.5M for decedents dying in 2009. For 2004 and 2005, this exclusion amount is $1.5M. From 2006 through 2008, the exclusion amount will be $2M. For 2009, the exclusion amount will jump from $2M to $3.5M.

This federal estate tax law shall not apply to the estates of decedents dying in 2010 because of the automatic sunset provision in the Act. However, unless Congress otherwise decides, former law will govern estates of decedents dying in 2011 and after, and the applicable exclusion amount will return to the $1,000,000 level. There is an unlimited marital deduction for all transfers made to a spouse who is a citizen of the United States.

These exclusion amounts may make more complex estate planning unnecessary for many married couples. However, for higher net worth individuals, estate planning will involve an examination of the value and title to all assets, as well as the utilization of both exclusion amounts to shelter as much property as possible from estate tax.

A common question is, "If I can leave everything to my spouse with no estate tax anyway, why do I need any estate planning?" The answer to this question is that only one exemption is being used, and although the transfers to the surviving spouse will not be taxed in the decedent's estate, the amount which exceeds the exclusion amount could be taxed in the surviving spouse's estate at almost 50%.

To illustrate the problem, Adam and Barbara have a combined net estate of $3M. They have simple "sweetheart Wills" leaving everything to each other. However, they both die in 2005 from injuries sustained in a car accident, with Adam dying only days before his wife. Everything in Adam's estate will go to Barbara without any estate tax due because of the unlimited marital deduction. However, the exemption amount for people who die in 2005 is $1.5M. Everything over this amount in Barbara's estate will be taxed at close to 50% - a tax bill which exceeds $700,000.

To avoid this tax problem, the estate plan will generally involve the use of a family trust to the surviving spouse and children which is funded by the applicable exclusion amount with the rest of the testator's estate going outright or in trust to the surviving spouse which will qualify for the marital deduction.

Several means exist in which to avoid as much estate tax as possible. Some of these include: Disclaimer Trusts, Credit Shelter Trusts, Qualified Terminable Interest Property (QTIP) Trusts, Charitable Remainder Trusts, Life Insurance Trusts, and Qualified Personal Residence Trusts. Some techniques may be combined with others to maximize further the goal of tax avoidance.