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Expert Perspective

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e.Insight

Current Issue | November 16, 2017

Does Your Estate Plan Need a Yogi?

By: Julia Weaver, J.D., Director, Family Office Services and The Trust Company of Oxford


In this edition of e.Insight, we discuss certain "calisthenics" to enhance the flexibility and alignment of your estate plan. While these issues are always top of mind for most families of wealth, they become particularly meaningful with the present uncertainty of our future estate tax regime.

In her article, "Trust Modifications – Estate Planning's Technology Upgrade", Kara Talbott, CPA/PFS, CFP®, Sr. Wealth Strategist for Oxford Financial Group, Ltd., discusses these issues for families that have multiple trust structures, typically created over years and even generations. Kara brings seventeen years of experience working with Oxford's affluent families to analyze and create alignment with multiple, highly complex trust structures. Kara explains that "consistency is defined as harmony or compatibility among the parts of a complex thing... If the separate trusts making up the full structure are not designed in sync with one another, the structure will not operate effectively."

When cohesion is lacking, trust modifications and the laws of trust friendly states can be utilized to revise and align the respective trusts within a trust structure. This can also result in enhanced flexibility for generations to come. Oxford refers to this type of comprehensive analysis and trust modernization as TOFF.HD, named after a finely-attired British aristocrat. Like its namesake, Oxford's TOFF.HD is a process to refresh and re-attire a complex suite of trusts in collaboration with the team of estate planning attorneys. As Kara explains, "trust law is modernized almost continuously." TOFF.HD results in a cohesive structure that provides current and future generations with maximum flexibility and alignment with the family's philosophies, goals and objectives.

Flexibility enhancements should also be considered in the crafting of new testamentary documents, such as your wills and revocable trusts. Many provisions can be included to forestall decisions relative to tax planning until the death of the first spouse. This enables your trustees and personal representatives to factor in the then current federal estate tax laws prior to funding certain trusts and tax savings vehicles for heirs.

In our November 10, 2016 e.Insight article, "Estate Planning Considerations Post-Election – Time for Analysis, Not Paralysis", (and worthy of repeating after several months of reflection), we discussed several options for this type of flexible trust funding. Such provisions may include Disclaimer Trust funding, wherein all assets pass to the surviving spouse, who then has the option of making a qualified disclaimer of a portion of the estate into a trust for either tax advantages or creditor protection.

Additionally, other funding mechanisms direct that your estate is left to a single marital trust and your trustee or personal representative can then assess the current tax laws to make a post-mortem determination as to the amounts, if any, to fund certain tax advantageous trusts.

As with all tax and estate planning decisions, it is critical to fully understand your goals and objectives relative to asset protection, education of heirs, distribution philosophies and family objectives. Together with your entire team of advisors, Oxford Financial Group, Ltd., stands ready to review your unique situation for options to enhance the flexibility of your comprehensive estate plan.

The above commentary represents the opinion of the authors as of 2.8.17 and is subject to change at any time due to market or economic conditions or other factors. This information is not intended to serve as tax or legal advice. As always, tax and legal counsel should be engaged before taking any action.