Understanding Advanced Estate Planning in Los Angeles County

As the name suggests, advanced estate planning is a method that involves the use of legal techniques and tools designed to eliminate or reduce federal estate taxes. It also consists of the use of techniques that are designed to provide asset protection or make a business better.

Ideally, the main aim of advanced estate planning is to ensure the smooth running of your business and asset distribution after your death. There is a wide range of techniques integrated into this type of planning. However, they can be categorized as “squeezing” or “freezing” techniques.

The squeezing technique focuses on reducing the value of assets while freezing is aimed at appreciation. The best thing about these techniques is that they are designed to lower future taxes. Some methods include Dynasty Trust, Intentional Defensive Grantor Trust (IDGT), Irrevocable Life Insurance Trust (ILIT), Totten Trust, and many more.

Advanced Estate Planning Process

While anyone can use advanced estate planning, the technique is ideal for individuals going through Federal Estate Tax. In cases where there are issues even after a living trust has been implemented, or there are one or more trusts, it is advisable to utilize this process.

Besides, it is also imperative to note that advanced estate planning differs relatively from traditional methods. The techniques involved cover a wide range of areas. Even so, the process is relatively easy. The steps to follow include:

• Preliminary analysis
• Blueprint design
• Review
• Modification and implementation
• Care and maintenance

The process can be altered or tailored to suit an individual’s needs and preferences.

Advanced Estate Planning Techniques

There is quite a wide range of advanced estate planning techniques offered by different firms in California. But the most common types include:

Qualified Personal Residence Trust (QPRT)

This technique allows individuals to move their primary or secondary residences out of an estate going through Federal Estate Tax. It does so while allowing you to maintain full rights over the residence. After your passing, the trustee and the family attorney will transfer the property to the intended beneficiaries.

Irrevocable Life Insurance Trust (ILIT)

ILIT is yet another unique technique. This is because it entails a particular type of insurance. Technically, with life insurance, the beneficiary is guaranteed premium-level benefits. The insurance can be placed on the life of either a spouse or a single partner. After paying the insurance, you can gift the ILIT benefits to cover the premiums.

The benefits or cash from your policy will be credited to Irrevocable Trusts immediately or after your demise. Besides, unlike other techniques, it is not subject to estate taxing, and the beneficiaries can enjoy the benefits without paying extra.

Family LLC

Also known as a Family Limited Partnership or Liability Limited Company, Family LLC is another technique that can provide lifetime benefits without giving up control. The technique integrated in this method allows you to channel your wealth across several generations. It also helps keep taxes on your estate on a minimal level.

One of the best things about this technique is that it protects assets and shields LLC owners from liability either directly or indirectly. It is quite a good tool, especially for individuals looking to use it for business estate planning purposes.

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Charitable Remainder Trust (CRT)

As you might have guessed, this technique is about leaving assets to charity or making charitable contributions. Nonetheless, instead of leaving a specified amount of assets to charity in the will, a Charitable Remainder Trust can be set up during the grantor’s lifetime.

Typically, the grantor will be taxed or deducted a certain percentage of assets yearly to go to the CRT during his lifetime. After death, the trust can get the cash or liquidate assets that will go to charitable donations.

Buy/Sell Agreement Trust

This is one of the most important aspects, especially for families that run a business. A buy/sell agreement is mainly designed to restrict the transfer of interest accumulated from assets in the business. It applies during and after your death.

The buy/sell agreement is also designed to establish a mechanism for other parties to buy out shares of the deceased. Thanks to the agreement, the grantor can rest assured knowing that their assets or business will go to the intended person.

Why is Advanced Estate Planning Important?

Firstly, estate planning is essential for financial, legal, and personal reasons. It can help ensure that you and your hard-earned assets are well protected after death. Besides, it also helps eliminate the emotional burden present during the distribution process.

Without an advanced estate plan, it is easy for arguments between family members to break out. Apart from that, an advanced estate plan can also help protect your heirs. It will ensure the grantor’s wishes are carried out and prevent future tax burdens from the estate. Finally, advanced estate planning will help ensure that you and your loved one’s assets avoid the stress of probate court.

Which Documents Do I Need in Estate Planning?

Several documents are needed in advanced estate planning, as shown below:

• A living will- This is also known as a medical care directive. The willmaker makes it while they are alive. It details the services and medical treatments you consent to receive when you are not in a position to make the decisions yourself.
• Financial power of attorney- This document allows you to place another person or attorney responsible for managing your assets and financial affairs after your demise.
• Last will- This is a legal document with directions on how you would like your property or assets to be distributed or allocated after your death. You can set up a trust and select a trustee to ensure your administration is conducted according to your wish.
• Trust- This legal document provides a third party or trustee with powers to manage or distribute assets to the beneficiaries on your behalf. After setting up a trust, the grantor can place assets for the beneficiaries, such as property or money.
• Medical power of attorney- This document is similar to the financial power of attorney. It allows individuals to make medical decisions if the grantor becomes incapacitated. Besides, it is possible to combine it with a living will to create a better healthcare directive.

Tips for a Successful Advanced Estate Planning in Los Angeles County

Advanced estate planning can prove to be a daunting task. This requires strategy and meticulous planning to attain the best results. Here are some professional tips you can use to begin your advanced estate planning process with ease.

Assemble a team

The first step should be to assemble experienced professionals to help you with your estate planning. Look for professionals such as financial advisors and estate planning attorneys. They will help you map out a customized and complete plan for your estate.

Consider creating a trust

Creating trust is the best way to guarantee that your assets will be in good hands. You will be required to choose a trustee who will help allocate assets according to your wishes.

Plan for state and federal taxes

One of the best things about advanced estate planning is that you can plan how your taxes will be paid. Usually, beneficiaries are required to pay a certain percentage of taxes after receiving their inheritance.

Keep the beneficiaries updated

Even during will preparation and advanced estate planning, keeping your beneficiaries up to date is necessary. They will need to be aware of their position as beneficiaries and understand the measures they are taking to secure the future of their assets.

Account for digital assets

In this era, it is possible to have digital assets apart from money and physical belongings. You might have cryptocurrency in a digital wallet, shares, and other assets online. Ensure you account for everything, including login IDs and passwords.

Final Thoughts on your Estate Plan in Los Angeles County

Trust, wills, and other estate planning documents are fundamental in estate planning. This is because they help ensure proper management of assets and property after the death of a loved one. Nonetheless, when more advanced estate planning is needed, it is advisable to work with a professional. This is because the complexities involved can make it easy to make mistakes.

Are you looking for a professional to help you with advanced estate planning? We are a top trust and estate law firm in California and can help you design your ideal estate plan. Contact us today for the best results.