Dynasty trusts often conjure up images of very wealthy families that have a great deal of money to pass onto their heirs. However, dynasty trusts can actually be an effective tool for families with more average assets to distribute. Investopedia defines dynasty trusts as long-term trusts established to transfer wealth from generation to generation while avoiding the incurrence of transfer taxes such as the estate tax and the gift tax. Before deciding if a dynasty trust is right for your needs, it is important to understand how they work and whether or not their benefits will meet your individual needs.

The Basics

Basically, dynasty trusts are established so that they can survive for 21 years after the death of the last person for whom the trust was established. Theoretically, this means such trusts could be in existence for more than 100 years. Typically, the original beneficiaries are the children of the person that has established the trust. When those children die, the trust typically begins to benefit the grandchildren and possibly great-grandchildren of the individual that established the trust. This is why they are referred to as dynasty trusts because they can continue to benefit several generations of heirs. Dynasty trusts are irrevocable, which means that the person that establishes such a trust will have no control over the trust or its terms once it is funded. Instead, it will be controlled by a trustee appointed by the person that has established the trust.

Estate planning can be a complicated process, especially for individuals that have diversified assets. The process can be even more complex for individuals engaging in estate planning when those individuals have foreign assets to consider. If you have or are considering acquiring foreign assets, including foreign real estate property, it is important that you understand how doing so may affect your estate planning tools. An experienced estate planning attorney can help you further understand the unique nature of foreign assets as well as the mechanisms that you can put in place to protect them.

Validity of Wills

It is possible for a valid United States Last Will & Testament to be considered invalid in a foreign country. Typically, to avoid a Will being deemed invalid it must comply with the requirements of a valid Will in the foreign jurisdiction where a person’s assets are located. This is one reason why it is imperative to work with an experienced estate planner in the country in which your foreign assets are located – otherwise, you risk losing those assets or having them distributed in a way that is not according to your wishes. You also need to check with an experienced estate planning attorney in the United States to see how multiple Wills can affect your Will here.

While some aspects of estate planning can seem pretty rigid, it is important to look at them while keeping an eye on things that will allow for some flexibility. By building flexibility into your estate planning tools where it makes sense, you can save yourself from headaches down the road and also plan effectively for the unexpected events that happen during life. Additionally, flexibility in your approach to estate planning will allow you to effectively plan for changes in tax policy and even the value of your assets so that such changes will not significantly impact your ability to distribute your assets according to your wishes.

Determine Tax Consequences

One of the first things to do when building flexibility into your estate planning portfolio is to determine which options will have the greatest impact on taxes, not only for you but also for your heirs. This is especially important for younger people beginning the estate planning process. One of the most common questions is whether or not you should try to distribute your assets through lifetime gifts or if you should keep them in your estate to be distributed later. Without having a crystal ball to predict the future of the estate tax, this really depends on the current and potential value of the assets in question.

It is important to remember that whether your estate is subject to probate or not, you should make sure that you have designed a comprehensive estate planning strategy that effectively distributes all of your assets so that your family is not forced to rely on the state to make important decisions regarding the distribution of your estate. At the same time, smaller estate may be eligible for a process known as voluntary administration in New York. This process is also called disposition without administration or small estate proceeding, but regardless of what it is called it is important to understand the process especially if it may be applicable to you.

Basics of Voluntary Administration

Voluntary administration can take place whether or not the deceased person has left a Last Will & Testament. Typically, only personal property is eligible for distribution through voluntary administration. This means that if a deceased person solely owned real property such as a home that you plan to sell, then such property would not be eligible for voluntary administration and would presumably exceed the value of the small estate threshold. Currently, the New York small estate threshold is set at $30,000 which means that any estate valued over that amount will still be required to go through probate. Generally, any interested party may file to become the voluntary administrator of a deceased person’s estate that qualifies for voluntary administration.

Estate planning is a complicated process that involves a great deal of different nuances and other important aspects that can sometimes be overlooked. One of the most overlooked aspects of estate planning is preparing heirs for inheritance from an early age. According to a recent article from InvestmentNews.com, not doing so is one of the reasons that far less wealth was transferred to baby boomers from previous generations. Now, by engaging in responsible and comprehensive estate planning strategies with an experienced estate planning attorney, you can work productively to make sure that you are able to transfer as much of your wealth as possible to future generations according to your wishes.

Factors that Diminish Wealth Transfers

Being aware of various factors that can diminish wealth transfers may help you avoid those pitfalls. These factors include:

Many areas of the law are constantly changing based on a variety of factors. Estate planning is no exception, especially given that there are potential changes coming to the United States tax policy under the current administration. One of those potential changes is the elimination or restructuring of the estate tax. For individuals with trusts or considering establishing a trust as part of their comprehensive estate planning strategy, the elimination or restructuring of the estate tax may make people wonder how effective those trusts will be in achieving the goals behind their creation. Even with the potential for such changes, trusts are still an important tool when it comes to comprehensive estate planning that will continue to provide many important benefits like those below.

Avoiding Probate

With or without the estate tax in its current form, trusts can help you avoid the headaches that often come with probate. By creating specific types of trusts to handle various assets and properly assigning such assets to those trusts, you can avoid the need to probate those assets This can save time and money, and can help ensure that your assets are distributed in the way you see fit.

The number of Americans choosing to cohabitate in lieu of marriage is steadily increasing. While nontraditional approaches to relationships are becoming more common, the importance of traditional measures related to comprehensive estate planning remain just as important. In fact, for couples that cohabitate without entering a traditional marriage, comprehensive estate planning can be an integral part of ensuring your partner’s financial security and preserving assets the way you want. The National Law Review recently published an article highlighting the importance of estate planning for cohabitating couples and while the following important information is not an exhaustive list of considerations, it is a place for cohabitating couples to begin when approaching estate planning.

Real Property

If the home you share with your partner is not in both of your names, you are likely to run into complications if they pass away. Without a traditional marriage, intestate succession will not work in your favor when it comes to property. Without a Will in place that specifically leaves that home to you, you would need to vacate the home after the title holder’s death or purchase the home for fair market value. Neither of these scenarios are ideal, and they are likely contrary to the plans you and your partner had for any property you own in the event of one of your deaths.

Growing older and the inevitability of death are unpleasant topics for most people. Often equally unpleasant is the thought of being alive but being unable to make important decisions for yourself. Part of a comprehensive and effective estate planning strategy includes ensuring that you have planned for the possibility of future incapacity. Incapacity typically refers to the inability to make important medical and financial decisions, but proper planning for the possibility of such an occurrence can help make sure that should such circumstances arise, your designee will be adequately prepared to handle them. Failing to plan for incapacity can result in serious financial consequences and may inhibit your ability to distribute your assets as you see fit.

Perhaps the most important part of ensuring that you have adequately planned for the possibility of incapacity is working with an experienced estate planning attorney to make sure all of your estate planning documents accurately reflect your wishes for them. An estate planning attorney can review your estate plan for accuracy as well as for compliance with the law, and can ensure that any steps you have taken to plan for incapacity will fulfill your goals. The following suggestions can help you plan for the possibility of incapacity and avoid the pitfalls that come from being unprepared.

Power of Attorney

Comprehensive estate planning is a responsible way to protect your assets. One of the primary ways you can utilize estate planning to protect your assets is by ensuring that your estate plan accurately reflects how you wish to have your assets distributed in the event of your death. Taking steps toward preventing individuals from contesting your Will is one way to help make sure that your estate will be distributed according to those wishes. A common approach many people take to contesting a Will is by claiming that the testator – or the person that created the Will – made decisions within the Will because of undue influence. While this claim is not always wholly unavoidable, there are steps that you can take to decrease the chances that such a claim will arise.

Understanding Undue Influence

There is nothing wrong with an individual asking for specific property or even a child encouraging a parent to leave specific things to them instead of their siblings. Courts do not typically view these actions as examples of undue influence, even when an individual is fervent about their desires. However, such requests move closer toward undue influence when the testator is in a compromised position such as being mentally or physically ill. For instance, if the child asking for property is the ailing parent’s caregiver, a court may find that repeated requests for certain assets could qualify as undue influence depending on the other circumstances surrounding the request and individuals involved.

Most individuals look forward to retirement for many years. The chance to enjoy the hard work you have put forth throughout your lifetime is appealing, and being able to do so without being tied down by work or other responsibilities often sweetens the potential possibilities that await you in retirement. For some people, retiring abroad is one of their life goals. Maybe they visited a place they simply fell in love with or maybe they want to take advantage of more favorable economic situations that can exist for some individuals in other countries. Whatever the reason for desiring a retirement abroad, there are some important estate planning considerations to keep in mind.

Double Taxation

If you remain a United States citizen, you will still be subject to U.S. taxes. That means you need to be aware of the tax policy in any country you might be considering retiring in outside of the United States. If the country you want to retire to will also impose taxes on you, you may end up paying double the taxes on your income and potentially on your assets. This can significantly reduce the size of your estate, in turn hindering your ability to leave as much of your assets as possible to your heirs. While you can renounce your U.S. citizenship, doing so carries a wide range of consequences. It may become more difficult to visit loved ones in the United States, and you may even be subject to the U.S. expatriation tax.

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