Musings from the CEO, Summer 2017
By Mike Hoffman, Esq., CPA
There are traditionally three phases of estate planning. I refer to these phases as Core, Legacy and Stewardship.
Core
Core is the phase of estate planning that applies to everyone. Each of us should have a Will, a General Power of Attorney, and a Health Care Directive.
Wills control the disposition of a decedent’s property and nominates a person to serve in a fiduciary capacity concerning the estate. A Will can include language to greatly simplify the probate process, as well as achieve a number of other estate planning objectives, including tax savings and asset protection.
The General Power of Attorney is a document that can spring into effect in the event of disability or incapacity, appointing an agent to handle one’s property and daily responsibilities.
The Health Care Directive is Georgia’s latest solution for appointing an agent to make health care decisions on one’s behalf if you are unable to make those decisions yourself. It gives guidance and involves an expression of treatment preferences at a time when you are unable to make these decisions concerning medical care.
Legacy
The Legacy portion of estate planning includes looking at what makes up the estate and developing a plan to pass assets to future generations in a manner that will preserve and protect the value. With closely-held businesses, this includes succession planning. For taxable estates, Legacy planning could involve liquidity planning since death taxes must be paid in cash.
Stewardship
The third phase of estate planning I call Stewardship. Our clients desire to be good stewards of the assets that they have accumulated. They are interested in passing those assets on in a protected fashion. This usually means trusts for future generations that are protected from future death taxes, divorces, and creditor claims. This phase of estate planning often involves setting up life insurance trusts to remove death benefits from taxable estates and family trusts to begin the process of annual gifting and “freezing” techniques. There is an alphabet soup of other techniques that may or may not be applicable, including FLP’s, FLLC’s, GRAT’s, DGT’s, CRT’s, CLT’s, QPRT’s, QTIP’s, and many more. This Stewardship phase of estate planning is the area where estate taxes are saved by the $millions and $billions, and assets are protected from future outside claims. This area is often where professional management is introduced. Stewardship planning is where families implement their philanthropic objectives.
Estate planning, through these three phases (Core, Legacy and Stewardship), is a building block approach, not a one-off agenda item. All of us need the Core documents, and these documents must be periodically reviewed to keep them current with the changing circumstances of families and the law. Legacy planning evolves and is accomplished most effectively if the client is able to maintain control and flexibility to change his or her mind in the future. Stewardship generally requires rolling up one’s sleeves and doing some work now, spending some money now, in order to achieve miraculous results for future generations.
That’s Estate Planning 101. It affects all of us one way or another. If you are due for a “check-up”, please give us a call at 404-255-7400 or send us an email at info@hoffmanestatelaw.com and one of our talented estate planning attorneys will be glad to review your situation.
