Wednesday, November 30th, 2011
Attorneys Robert Esperti and Renno Peterson define estate planning best as “giving what you have to whom you want, the way you want, and when you want, and if possible, saving every fee and tax possible”. While the definition above appears concise and simple, estate planning, and more specifically wealth transfer, is potentially a complex undertaking requiring periodic updates to your plan. As your objectives, family dynamics, property and tax laws, current and projected economic environment, and a host of other factors change, it becomes incumbent to make adjustments to the plan. As an example, some or all of the following considerations may be important to you, and as they change over time it makes sense to update your plan to more closely align it with your objectives:
- Amount of wealth to transfer
- Married – financially secure or not; first marriage or not
- Children – adult or minor; financially secure or not; spendthrift or not
- Closely held business(s) – controlling interest or not; management team in place at death or not; adequate liquidity to both pay estate taxes and provide operating capital
- Charity – benefit many organizations or a couple favorites; establish a legacy or not
It also makes sense to update your plan when an uncommon external opportunity presents itself. We are currently in an exceptionally low interest rate environment. Certain estate planning strategies provide more favorable results when implemented during a period of low interest rates and the wealth transfer terms can be “locked in” at that time. A Charitable Lead Annuity Trust (“CLAT”), by design, is an estate planning vehicle that can help an individual with the following profile to maximize their wealth transfer objectives in a low interest rate environment:
- Charitable intent
- Desire to maximize wealth transferred to heirs or others at some defined future date
- Financial situation allows for a portion of income to be paid to a charitable organization(s) annually for a defined period
- Pay income tax at or near the highest tax rate
A CLAT, like many estate planning vehicles, is very technical and must be tailored to each individual’s situation. If you would like to learn more about CLATs and how they may benefit your individual situation, please review this PDF presentation or contact me via email or phone at 561.620.1715.
James Barnett is a manager in Kaufman, Rossin’s Estate, Trust & Exempt Organization department. Kaufman, Rossin & Co. is one of the top CPA firms in the country. He can be reached at email@example.com.
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