Estate Planning: Wills & Trusts
The team at Boyce Law Firm has the knowledge and experience needed to provide practical advice and prepare an estate plan tailored to your specific needs. Whether your concerns are primarily financial or you want to name specific individuals to care for your minor children, we will listen to your concerns and put everything in place to provide you with peace of mind that comes from thoughtful planning.
Last Will & Testament
Wills are the most common way for people to state their preferences as to how their estates should be handled after their deaths. Wills vary from extremely simple single-page documents to elaborate volumes, depending on various considerations such as the size of the individual’s estate and specific preferences of the individual making the will. Not only does a Will direct “who gets what” but also nominates those who will play important roles in your estate plan. Your personal representative (a.k.a. executor) is nominated to manage assets of the estate, arrange for payment of debts, files all necessary court and tax documents for the estate and makes final distribution to heirs.
Individuals who have minor or dependent children may use a Will to name a guardian to care for their children if there is no surviving parent to do so. If a Will does not name a guardian, a court may appoint someone who is not necessarily who you would have chosen. In addition, you may appoint an independent person, referred to as a trustee, to manage the finances for the minor children while the guardian maintains custody of the children.
Our team takes the time to walk you through these tough decisions, to tailor your Will to carry out your specific wishes and instructions.
Estate Planning with Trust
Revocable living trusts are a popular alternative to a traditional will as a way to pass along property at death. The most prominent advantage of the revocable trust is that it allows the decedent to avoid probate. A revocable living trust is an arrangement you make for management and distribution of your property. The trust is revocable, meaning that the creator of the trust can modify or revoke it at any time during his or her lifetime. Placing assets into your trust also allows you to control the disposition of those assets after you pass away. In South Dakota your trust can continue in perpetuity. A trust used in this manner is an effective way of creating spendthrift and creditor protection for your family. A common misconception is that you have to have lots of money before you can create a revocable living trust. Not true. A revocable living trust can be used in small, medium or large estates alike.
Advanced Trust Planning
There is a vast array of trusts that we use for our clients. Different types of trusts are used to promote and accomplish the client’s specific goals. When we delve into advanced trust planning, we are typically balancing the management of estate taxes, gift taxes, income taxes and generation skipping transfer taxes. Not all trusts are tax sensitive, sometimes clients have an intricate plan of how they want their financial legacy managed for future generations regardless of the tax implications. This is where asking the right questions and listening to our clients is so important.
Some common types of trusts that we use are as follows:
• Irrevocable Life Insurance Trusts (ILITs)
There is a common misconception that life insurance proceeds are not subject to Federal Estate Taxes. While the proceeds are received by your loved ones free of any income taxes, they are includible as part of your taxable estate.
An Irrevocable Life Insurance Trust is created specifically for the purpose of owning your life insurance policy. A properly established and administered trust holds the policy outside of your estate and prevents the proceeds from being included as a taxable portion of your estate. The proceeds from the insurance policy can then be used to provide your estate with the liquidity to pay estate taxes, pay off debts, pay final expenses and provide income to a surviving spouse or children.
• Intentionally Defective Grantor Trusts (IDGITs)
An IDGT is a trust that not only moves assets outside of the taxable estate of its creator, but also shifts ownership of the assets outside the reach of creditors for asset protection purposes. Because the trust creator no longer owns the assets, all future appreciation and growth of the assets occurs inside the trust, outside of the grantor’s taxable estate, and out of the reach of predatory creditors.
Yet while the assets are not includible for estate tax purposes, income generated by the trust remains taxable to the grantor. This is why it is considered to be “intentionally defective” so that the income tax burden remains with the grantor.
• Qualified Personal Residence Trusts (QPRTs)
Our homes are often our most valuable assets and therefore one of the largest components of our taxable estate. A Qualified Personal Residence Trust or a QPRT (pronounced “cue-pert”) allows you to give away your house or vacation home to the trust at a substantial discount, freeze its value for estate tax purposes, and still continue to live in it. An added benefit of the QPRT is that it also serves as an excellent asset protection vehicle, keeping your home safe from creditors.
• Dynasty Trusts
Typically, there are no immediate tax savings when you create a dynasty trust. Dynasty trusts are often funded using your estate tax credit. The tax savings occur later, upon the deaths of your descendants, therefore saving a substantial of tax for your loved ones. Even after the trust’s assets have been accumulating for years, they remain free from federal gift and estate taxes for the life of the dynasty trust. South Dakota has no rule against perpetuity, which makes it an attractive jurisdiction for these types of trusts, continuing to benefit your family for many generations.
Planning for Incapacity
If you become incapacitated, you will not be able to manage your own financial affairs. So who will? Many are under the mistaken impression that one’s spouse or adult children can automatically take over for them if they become incapacitated. The truth is it is much more complicated than that. In order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This is called conservatorship.
• Durable Power of Attorney Finances
If you want your family to be able to manage your finances and medical decisions for you and avoid having to go to court, we can draft the proper legal documents to designate individuals who you trust to be equipped with the authority to manage things on your behalf while you are unable to do this for yourself, whether that is temporary or until your passing.
• Durable Power of Attorney Health Care
In addition to planning for the financial aspect of your affairs during incapacity, it’s critical that you establish a plan for your medical care. The law allows you to appoint someone to make decisions on your behalf about medical treatment options if you lose the capacity to decide for yourself. A power of attorney for health care and a living will (sometimes referred to as an advance health care directive) will inform the medical staff and your loved ones of your preferred medical treatments, such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
Business/ Farm Succession
Transitioning your closely-held family farm or businesses to the next generation can be the most difficult yet most gratifying process a business owner may ever endure. From tax issues to cash flow, buy-sell agreements to life insurance, our team will quarterback you through all aspects of creating and implementing a strategic and successful transition plan to enable your company or farm to continue throughout the next generation.