A Credit Shelter Trust is an Estate Planning tool used by married couples specifically for the purpose of reducing estate taxes (or “death taxes”) due upon the death of the second spouse. The Credit Shelter Trust operates much the same way as a Disclaimer Trust by using the federal and state exemption amounts of the first spouse in the amount of the gifts to the Credit Shelter Trust while giving the surviving spouse access to those assets as necessary to maintain their standard of living.
May
25
Washington State Estate Tax
Washington State levies a tax on the estate of of residents based upon their total “taxable estate”. The current estate tax, or death tax, rates range from 10% to 19% and are given in the table below. The tax is also applied to non-residents based upon the total property located in Washington State.
May
13
Washington Trusts: Disclaimer Trust
A “Disclaimer Trust” is a estate planning technique used by married couples in order to reduce or eliminate the estate taxes (federal and state) due upon the death of the surviving spouse (the last spouse to die). A Disclaimer Trust is one of several strategies that can be used in a will to accomplish efficient estate tax planning and should be discussed with an estate planning attorney, particularly if a couple’s assets (including retirement accounts and life insurance proceeds) approach or exceed the state or federal estate tax exemption. The current federal estate tax exemption is $5 million and the Washington state exemption is $2 million (see my post on the Washington state estate tax landscape).
May
06
Taking the Hassle out of Estate Planning
What are some ways to reduce the hassle of estate planning? Are there ways that a wills and trusts lawyer can improve convenience for his client without reducing the effectiveness of his representation? What about the use of LegalZoom, prepared fill-in-the-blank wills or other discount online services?
It is my belief that estate planning is fundamentally important for most people (previous posts here and here), but can be an involved process to do correctly for both the attorney and the client. No two estate plans (generally comprised of a will, powers of attorney and advanced medical directive) are the same and a good estate planning attorney functions both to inform the client about the law and to devise a plan that meets the clients goals based on discussions with them and the attorney’s knowledge of the applicable laws. One of the major hurdles that holds people back from completing their estate plan is finding the time to: choose an appropriate attorney (some tips here), discuss the estate planning process with their attorney and set up and attend meetings with the attorney. Through the use of a Virtual Law Office, some estate planning lawyers including myself have attempted to address this convenience problem.
May
03
Washington Trusts: Revocable Living Trusts
A “Revocable Living Trust” is a trust established by a person (the “grantor”) during their life, most often for the purpose of using the trust to hold their assets (real estate, bank accounts, brokerage accounts, etc) so as to avoid probate upon their death. The grantor retains the ability to control and enjoy the use and income of the trust assets during their life. The trust names the beneficiaries to receive the trust assets upon the grantor’s death and the trust assets transfer outside of probate. There are certain advantages and disadvantages of Revocable Living Trusts which I discuss below.
Apr
29
When to Update Your Estate Plan: Top 5 Life Events
Your estate plan should be updated after major life events to ensure that the language in your estate planning documents (wills, powers of attorney, trusts, etc) reflect your personal and financial situation and properly handle the new possibilities created by changes in your life. Your estate planning attorney should be able to handle any necessary minor changes through a “codicil” to your will – a document amending certain sections of your existing will to deal with the new circumstances. In some cases, a new will and other documents may be necessary to accommodate all the potential legal ramifications of such changes.
Apr
27
Estate Planning Steps and Process
- Select a few estate planning attorneys that might be a good fit for you. Give them a call and see if they are going to meet your needs regarding budget, availability, expertise and personality fit. (Here’s a previous post on finding an attorney).
- Make an appointment for sooner rather than later. Finding time for the estate planning process (even though it is not as time consuming or as difficult as many believe) is difficult for many for a variety of reasons, but setting a date in stone to meet with your attorney is a giant step towards crossing this off your to-do list.
Apr
19
4 Lessons from a Washington First Responder Will Clinic
This last weekend I had the pleasure of participating in the Washington State Bar Association’s Will Clinic for First Responders (police, firefighters, paramedics). As a volunteer lawyer, I had the opportunity to assist in the estate planning (wills, powers of attorney, advanced health care directives) for a couple of families who put their lives on the line for me and my family every day. It was a very rewarding experience for all involved and I was able to come away with four lessons that I would like to share with every young family.
Apr
13
U.S. Beneficiary of Foreign Estate
What happens when a non-U.S. relative leaves you an inheritance in their will? Will special inheritance taxes be due on the bequest? Are there restrictions on bringing money into the U.S.? I have prepared a quick guide below to helping U.S. citizens and residents deal with the situation when they inherit money from a foreign relative.
Apr
12
Estate tax basics
With tax season upon us, I thought I would take just a moment to give a very brief overview of the estate and gift tax scheme at the federal and Washington state levels. The amount of any estate tax (or death tax or inheritance tax) due upon your death depends on the size of your estate, the amount of gifts you made during your lifetime, the applicable exemptions at your death and the tax rate.