Here is a great little slideshow on top estate planning priorities to avoid tragedy and missed opportunity (“Top 10 Dangers Facing Senior Citizen Clients“) which I summarize below (adding a little California-relevant detail of my own), with a link to each slide:
- Plan for incapacity before it takes away your ability to plan.
- Avoid the evil probate monster, known to devour money, time, privacy, and family comity.
- Utilize the huge temporary increase in lifetime gift tax exemption, before it disappears.
- Plan carefully, and properly report gifts, to avoid the evil generation-skipping transfer (GST) tax, to maximize what goes to grandkids and their descendants, whether or not a dynasty trust is involved.
- Minimize and perhaps avoid income tax through advanced planning such as: use of life insurance; charitable trusts; special “incomplete non-grantor” (ING) trusts set up in, for example, Nevada, to avoid high state income tax on appreciated property sold in, for example, California.
- Avoid income tax with techniques achieving step-up in basis, such as: characterization as community property; use of Clayton election to avoid tax on capital gain between deaths of both spouses; asset swaps from irrevocable trusts; upstream gifting to parents; avoiding lifetime gifting of appreciated property to children.
- Use of life insurance, medical asset protection trusts, and supplemental needs trusts, as part of your own long-term care planning.
- Achieve bloodline protection from lawsuit or divorce threat with solid asset protection planning.
- Plan for special needs of descendants with health problems to avoid loss of government benefits and allow a higher quality of life under supplemental needs trust planning.
- Your most important legacy may be the transmission of values important to your family, perhaps even a family mission sustained by participation in a family business or charity.
As usual in lists like this, I’m adding another danger to avoid:
11. Lack of gun planning: The danger of violent criminal attack is greater for vulnerable seniors, and they should not only get self-defense training for themselves, but also make sure their family and caregivers are trained, along with guardians of any children, and firearm training may be one of the values that should be transmitted with incentive trust planning. There will likely come a day when you can no longer safely handle a firearm, and you should also plan for who will take them from you, how, and under what circumstances.
This is a very short, summarized list, and truth be told, there are a lot more than eleven areas of concern. To really understand these issues, consider attending our free training events.
