Estate Planning Analysis
You spend considerable time and effort in accumulating wealth. Over time, a successful physician will employ various strategies in aggregating a portfolio of significant financial assets. Yet, without an Estate Planning program, a lifetime of hard work as well as substantial funds, could be needlessly wasted.
The trained experts at James D. Yurman & Associates, Inc. can help you devise an Estate Planning program that:
- Minimizes probate costs, administrative expenses, estate taxes and final expenses. (Currently, Federal Estate tax rates effectively begin at 37%).
- Ensures the appropriate distribution of your assets (e.g. should assets be transferred to minor children without limits and conditions?)
- Creates sufficient liquidity to pay all settlement costs. For example, can the executor of your estate write a check for the thousands of dollars potentially owed to pay various estate expenses without touching your qualified retirement plan funds?
Determine the Estate
The first step in effectively planning your estate is to determine what you own, and how it is owned (individually by one spouse or jointly?). The R.I.S.K. Process™ Questionnaire can help you identify your assets and liabilities in order to determine your net worth.
Determine Appropriate Plan of Distribution
Your Last Will and Testament does not control the distribution of your assets at death. Contractual arrangements, such as joint and survivor bank or brokerage accounts, the beneficiary designations on your insurance policies and IRAs and qualified retirement plans could override disbursements of assets specified in your Last Will.
Additionally, at what age would you be comfortable with your children taking full control of your estate? In most states, the age at which children can legally inherit your estate is 18, which is the age of majority.
A thoughtful and well-conceived estate plan will ensure that your assets are distributed in accordance with your preferences, irrespective of a challenge.
With federal estate taxes currently beginning at an effective tax rate of 37% (2017), and moving higher from there, it is critical for high net worth families to employ tax minimization strategies.
Basic Estate Planning
Since physicians are likely to be high-income earners and accumulate a significant net worth, their estate planning should be more sophisticated than merely drafting a Last Will.
For a number of reasons, we at James D. Yurman & Associates, Inc. feel that a Family/Marital Revocable Trust should be the cornerstone of your Estate Planning program. First, it allows you to determine the appropriate age at which your children will take control of your estate. Secondly, it effectively takes advantage of the Unified Credit (i.e. federal estate tax exclusion).
Common Tax Avoidance Techniques
Another method of minimizing the effect of estate taxes is to establish an Irrevocable Insurance Trust. Since you cannot be taxed on assets not in your control, an Irrevocable Insurance Trust allows you to place an insurance policy into the trust, which is payable at your death to someone else (and therefore, beyond your control). The beneficiary receives the insurance proceeds tax-free! An alternative is to have your trusted children purchase insurance on your life directly, with them designated as beneficiaries. Another cost effective option to consider is the purchase of a joint and survivor life insurance policy within the trust.
The estate planning team at James D. Yurman & Associates, Inc. would be pleased to discuss your retirement income concerns. Contact us for an informal, no obligation discussion.