There is still a need for trusts and estate plans, despite that the Unified Gift and Estate exemption is now $5.49 million per person. I always tell my taxpayer clients, don’t just make decisions based upon tax consequences. Under the new tax laws, the tax issue in asset planning goes away for most taxpayers. The tax issues are not the only support for a trust and estate plan. Rather, there are other reasons for a comprehensive estate plan other than to save estate taxes. The following are some of the reasons a good estate plan can still be beneficial and help achieve goals.
1) A trust can avoid probate
In Arizona, the probate process is fairly quick and not expensive (unlike other states where a will must be proven to the court, and it is notoriously costly and lengthy). However, with a trust plan in place, probate can be avoided.
2) Leave assets to your beneficiaries when you want and how you want
If the beneficiary is a minor, all 50 states have laws that require a guardian or conservator be appointed to oversee the minor’s needs and finances until the minor becomes a legal adult. This is true even when the beneficiary lives with its parents. You can prevent family discord and costly legal expenses by setting up an estate plan to designate a guardian and/or trustee for your minor beneficiaries.

Sometimes, there are concerns that the children are not prudent at managing money or have an overbearing spouse or partner may squander the beneficiaries’ inheritance or take it in a divorce. A carefully crafted estate plan can protect the beneficiary from their own bad decisions as well as those of others. In today’s world, there are many blended families with children from previous relationships. With proper planning, you can avoid the risk beneficiaries will be disinherited if the surviving spouse wants to change the verbally agreed-upon distribution to the deceased’s children/beneficiaries.
3) Protecting Assets from Unforeseen Creditors
Asset protection planning is another factor to consider a comprehensive estate plan. Once it is known or even just suspected that a lawsuit is on the horizon, it’s too late to put a plan in place to protect your assets. On the other hand, a comprehensive estate plan that couples with a sound financial plan will protect assets for the benefit of both the owners during their lifetime and their beneficiaries after their death.
4) Business succession planning
For business owners, especially for businesses with multiple partners, creating and implementing a sound succession plan will provide several benefits to owners and partners if one of the partners/owners is deceased: It eliminates the need for valuation upon death because the parties can agree upon a price for the partner’s shares of business beforehand. The life insurance policy proceeds will be immediately available to pay for the deceased partner’s share of the business, with no liquidity or time constraints. This effectively prevents the possibility of an external takeover due to insufficient cash flow or the need to sell business or other assets to cover the cost of the deceased’s interest. Overall, a good succession plan can make for an easy transition during difficult times.
5) Incapacitation
As part of a good estate plan legal documents are executed to choose a decision maker if the person isn’t able to choose for themselves. This can give people great comfort that if the worst were ever to happen that they would have someone they trust making decisions for them and things would be done according to their wishes.

There are many other non-tax reasons for having a trust and complete estate plan. Of course, every case is unique and must be thoroughly analyzed to develop the plan that meets your goals and expectations.

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T. 480.991.0032 / www.taxlawaz.com