Estate Planning Terms

Clients want to be able to decide how their wealth is distributed and to whom it goes when they die. However, without a solid estate plan in place, any number of costs—probate, funeral and burial expenses, state and federal estate taxes, and professional advisor fees—can eat away a large portion of the legacy they’ve worked so hard to build. Estate planning helps to assure that an estate will be settled in an efficient manner and that final wishes will be carried out to benefit the people and institutions of the client’s choice.

Irrevocable Life Insurance Trust
An irrevocable life insurance trust (ILIT) is a trust created to own life insurance. By establishing an ILIT, an insured can shelter death benefits from estate taxes and minimize, if not completely eliminate, federal gift tax.

Blended Families
Blended families—ones in which the husband and/or wife bring children and assets from a previous relationship—outnumber traditional families in the United States. When doing estate planning, clients who are part of a blended family must take particular care to avoid potential conflicts between a current spouse, ex-spouse, and children.

Bypass Trust
A Bypass Trust minimizes estate tax liability and preserves wealth by allowing each spouse to take full advantage of the federal estate tax exemption. However, the appeal of this arrangement is not only the estate tax savings, but also the flexibility that it offers the surviving spouse.

Dynasty Trust
A Dynasty Trust, also known as a legacy or generation-skipping trust, is designed to allow its creator to pass wealth from generation to generation without the burden of transfer taxes, including estate, gift and the generation skipping transfer tax (GSTT) on subsequent generations. Not just for the ultra-wealthy, its trust terms can be tailored to promote positive behavior in beneficiaries by requiring that they adhere to certain standards in order to be entitled to trust distributions.

Family Limited Partnership
A Family Limited Partnership (FLP) is a conventional limited partnership with at least one general partner and one limited partner. FLPs are created primarily to shift ownership of assets, and sometimes income, to family members, offering a number of benefits such as estate and gift tax advantages, over other forms of ownership.

Foreign Nationals
Non-U.S. citizens—or citizens with a non-U.S. citizen spouse—fall within a different set of rules under current estate tax law. They can face a significant estate tax liability that may be even larger than what they would incur if both spouses were U.S. citizens. Failure by these individuals to properly plan for U.S. transfer taxes may cause them to pay unnecessarily high gift and/or estate taxes.

Highly Appreciated Assets
Many high net-worth individuals need to develop an advanced estate plan that will employ sophisticated strategies to reduce their potential transfer tax liability and/or provide a means of liquidity for their loved ones to pay any taxes that may be due. One way to reduce potential estate taxes is to reduce the size of the taxable estate itself. This can be accomplished using estate freeze strategies such as qualified personal residence trusts; grantor retained annuity trusts; installment sales to intentionally defective irrevocable trusts; and private annuities.

Special Needs Trust
A Special Needs Trust can help clients with disabled family members achieve vital estate planning and financial goals. With proper legal and financial planning, the family can help assure that the person with the disability will enjoy a comfortable lifestyle, while preserving his or her eligibility for government-sponsored programs.

Spousal Support Trusts
A Spousal Support Trust is an ILIT created by one spouse, the grantor spouse, for the benefit of the other spouse, the uninsured spouse. When structured properly, it gives clients “the best of both worlds”—access to cash values and a federal estate tax-free death benefit.

Estate Planning Process


► First, we complete a Blueprint of your Estate and review your current wills and trust documents.

► Then, an Estate Tax Analysis report is prepared based on this information and current Estate Tax Law to let you know what will be your Estate Tax liability based on current value.

► A Second Estate Tax Analysis Report is prepared based on this information, based on future growth of the Estate to you and your wife’s Life Expectancy.

► Once we know the current and future Estate Tax Liability, we will begin to review plans to reduce the Estate Liability now and in future years. Once we settle on a plan that is acceptable to you, we will begin to review them with your current Attorney and Accountant.

► Some ideas that should be considered are: Defective Grantors Trust, Grantor retains Annuity Trust, Family Limited Partnerships, Dynasty Trust and Charitable Gifts that are among few ideas that merit consideration. By using some of these techniques, you can reduce the value of your Estate, therefore reducing the potential Estate Tax.

► Once a new plan is designed and is put in place we will review this plan with you as needed. Keep it up to date based on future changes in your family or business and Estate Tax Laws.

► At the end of this process you will need to decide what is the best way to pay your Estate Liability.

Contact EPDV
Call us toll free: (800) 633-8584 ext. 262 1415 Foulk Rd. Suite 103 Wilmington DE, 19803 FAX: (302) 477-9710