What is Estate Planning?
Estate planning is the process by which an attorney and his client
1.) work to minimize the impact of estate taxes,
2.) Make sure the client’s estate is disposed of in a manner consistent with the client’s wishes and
3.) Plan to lower the negative impact of the client’s death on his loved ones.
If that seems like a lot, it is because there is a great deal involved. In addition to being a lawyer, an estate planner must be part psychologist, family counselor, financial adviser and loyal confidant.
Do I Need to Form An Estate Plan?
This is probably one of the main questions you have in finding this site. The answer is it depends. Under current tax law, an individual has a $5 million credit against estate taxes. In addition, this amount is "portable," meaning that if you are married, your spouse can give you the unused portion of their estate tax credit when they die. This effectively means that all individual estates under $5 million will pass without federal tax implications, and all married estates worth less than $10 million will pass without federal tax implications.
But, federal taxes aren't the end of the story. For example, are there state taxes you have to worry about? In addition, are there any special plans you want to make? For example, do you want to make a gift to your school? Or do you want to make sure your children can afford college? These are all non-tax questions that need to be answered as part of the estate plan process.
Should I Just "Do It Myself?"
Thanks to various services, individuals now have the ability to write their own will or trust. This has led many people to think they can simply "do it themselves." While this may sound like a good idea, let me explain why it's not. Suppose you have a problem with your knee, so you go to the WebMD website and look up "knee problem." After doing a lot of reading, you determine you need a new knee joint. So, you now read how to perform the operation. However -- are you really capable of doing this yourself?" The obvious answer is no. While you are now better informed about the process, you haven't performed surgery before and don't have the credentials to do this yourself.
The same is true of the law. While it may seem that the law is merely a series of inter-locking documents, it's actually far more complicated. Doing it yourself will probably lead to problems you don't need. Put another way -- I have yet to see a self-made estate plan that works.
What is the Process?
To begin the process, we need to have an initial meeting, the purpose of which is to get an idea for the client’s overall philosophy and desires for his estate. Afterwards, the client has some homework to do. First, he has to fill out a questionnaire so I can get an idea for what tax issues might be involved. This also serves as a good time for the client to start “getting his affairs in order” such as consolidating financial accounts or making sure title to property is good. Secondly, he needs to make a list of who he wants to give things to and in what manner he wants to give those things away. For example, does he want to substitute money in case a specific item isn’t part of the estate when he dies? Third, I need to know if there are any special provisions that might be necessary, such as a special needs child who needs a special support trust or similar situations.
After I get all of this information, I get to work creating a plan that dovetails with the clients wishes and minimizes estate tax issues. There are usually phone calls and emails as the process moves forward to clarify certain points. The various documents will usually go through a series of drafts, after which I go over the details with the client. By this time, the plan is usually in good shape and all we need are a few minor alterations.
At this point, all that’s left is implementing the plan – getting the appropriate documents signed and filed with the appropriate people and offices. The process usually takes 2-3 months. I usually charge a flat fee for the service, ranging between $1500 - $3500, but it could be more expensive for a more complicated estate.
Please call to set up an appointment if you have further questions: 832.330.4101
This is one of several webpages maintained by the Law Office of Hale Stewart. Here are links to the others:
Asset Protection
Captive Insurance
Hale Stewart's Tax Law Blog
The Bonddad Blog (economic commentary)
Buy my book on captive insurance
734 East 29th Street, Houston, Texas 77009 Phone: 832.330.4101
