Death and Taxes: Estate Planning Helps With Both

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• Do It for Your Surviving Spouse, Family Members and Other Loved Ones
• Special Needs Can Make Planning Tools Complicated

Successful planning is more than tax avoidance or charitable giving. A sound estate plan supports personal hopes and dreams for family, friends or causes you value. “Everyone needs an estate plan, particularly if they have young children, to name a guardian and select a trustee to administer assets,” says Carlyn S. McCaffrey, partner and co-head of the Trusts & Estates department at Weil, Gotshal & Manges.

Don’t put it off, she says, and be sure to update your will regularly. “Some people prepare a will, set up trusts for their children, and think they’ve done everything perfectly,” says McCaffrey. “But they forget that they designated their 5-year-old child as contingent beneficiary of their $500,000 IRA. Without planning, the child gets the money—but the court will manage that money for the next 13 years.”

Do It for Your Surviving Spouse, Family Members and Other Loved Ones

Considering today’s complex regulations, it’s especially important to seek out a knowledgeable lawyer to guide you toward an estate plan you can live with. Estates regulation is a shifting minefield, says William Schwartz, former dean of Boston Law School and counsel at the Wall Street firm of Cadwalader, Wickersham and Taft. Schwartz says the legislature is considering several changes to tax (e.g. estate tax, gift tax, income tax, inheritance tax) and planning options in state law. Estates lawyers are familiar with the latest legislative changes; in addition, they often help clients adjust their estate plan for fairness, especially if a second wife is involved, Schwartz adds. Otherwise, children from a first marriage could receive nothing if the second wife outlives their father.

Contested wills are not common, but wealthy clients who substantially change a long-established estate plan should ensure that their decisions are not reversed later.

Special Needs Can Make Planning Tools Complicated

Theodore O. Rogers Jr., a partner at Sullivan & Cromwell who litigates probate and estates issues, says some affluent clients have complicated family situations. He suggests selecting a reliable, accessible witness to the signature who can testify if the will is challenged. He says some clients think a videotaped signing will prove that the signer is mentally sound, but Rogers disagrees.

“It sounds like a panacea—a great thing,” he says. “But from a litigation point of view, if that day [the signer] doesn’t look well, you’ve got a real problem. Or, let’s say he looks great—passes with flying colors. But a year later, he has visibly declined and wants another change. If you don’t make a new tape, you’re accused of hiding something. If you make the tape, you show a guy who’s much worse. It limits your future options.”

For more information on this area of law, see our overviews of estate planning, wills, trusts, and probate and estate administration, or reach out to an estate planning attorney for legal advice.