Estate Planning

Will & Probate

Trust Formation

Trust Administration

Estate Taxation

Charitable Giving

Wills & Probate Attorneys Idaho

Every estate plan will have a Will in place. There are many investment advisors and other professionals that will tell you not to use a Will and that the only way to go is a revocable trust. While a revocable trust is a great tool that can be very helpful in many situations, a Will is still going to be necessary, even if you have a revocable trust in place. There are many situations that a Will is going to make much more sense as well. When looking at an estate plan there are reasons to use trusts and there are reasons to use Wills, depending on your goals, the assets in your estate and many other factors.

A Will is the most basic document that can be used to pass property at the time of your death. The main reason many advisors recommend trusts is to avoid the probate process. Avoiding probate can be beneficial, but using a trust is not always the best option. For example, your estate may not have any probate assets in it, at which point there is no reason to avoid the probate process. Another factor will be your state of residence and where you own property. Many states (including Idaho) have an unsupervised probate process that is generally simple and there may not be any reason to avoid that process.

We are experts at navigating the estate planning process which includes drafting of your Will and probating the Will when the time comes. The probate process is something that takes some time, but does provide some safeguards for the beneficiaries of the estate and the person representing the estate. After reviewing your assets, your goals and any other relevant factors, if we decide a Will is the best way for you to set up your estate plan, we will draft your documents to provide the best plan possible to achieve your goals.

Trust Formation

There is a multitude of reasons to form a trust, from probate avoidance, to college savings, to gifting and wealth transfers and many more. We are experts not only in the formation of trust but also in the tax consequences of all the different types of trusts that are available to you. There are several different types of revocable and irrevocable trusts that have different tax or other benefits that will allow you to transfer wealth, protect assets and give yourself piece of mind that your wealth will be protected and also preserved for the next generation.

We work with accountants and investment specialists daily to ensure your goals are being met by the trust you are establishing. For example, there a certain trusts that are good for very aggressive investments and other trusts that need to be invested much more conservatively. When establishing a trust we will work with you and help you base your decisions on your asset mix and goals for the future.

Some of the common types of trusts we use are:

Revocable (Living) Trust
Revocable Real Estate Trust
Irrevocable Life Insurance Trust (ILIT)
Grantor Retained Annuity Trust (GRAT)
Charitable Remainder Annuity Trust (CRAT)
GST (Dynasty) Trust

This is of course not an exhaustive list of trusts that can be established. We will customize a trust for you if a trust is in your best interest to reach your goals.

Trust Administration

After a trust is formed there is maintenance for the trust and depending on the type of trust there are different types of maintenance needs. Some trusts need to file a tax return, some trusts do not. The tax code will differentiate between grantor trusts and non-grantor trusts.

The code will also treat simple trusts and complex trusts differently. All trusts are governed by Subchapter J of the Internal Revenue Code and we have extensive experience dealing with the different provisions of Subchapter J.

We offer services to trustees in need of legal advice about administering a trust and we will also be able to help the grantor of the trust to understand proper administration. There are many factors to look at in the administration of trust, from the type of investments made by the trust, to distributions to beneficiaries and the tax consequences of these decisions.

With our experience in administering trusts and our vast knowledge of the tax code we can help you maximize the benefits of any trust. During the administration of a trust it may become clear that the terms of the trust are not longer in the best interest of the grantor or the beneficiaries, or both. Under these circumstances there are some options that can help.

Revocable trusts are going to be the simplest, because they are revocable, the trust can be modified under the terms of the original trust documents. If the trust is irrevocable, the job becomes a little more difficult. There are two ways to modify an irrevocable trust.

Trust and Estate Dispute Resolution Act (TEDRA)

Under TEDRA, an irrevocable trust can be modified, but there are some strict rules that need to be followed. The modifications must be within certain parameters and a court must approve the modification.

There is also a requirement that all parties involved agree to the modification. Of course, it is always best if you do not need to use a TEDRA, because it is expensive and time consuming, but it can become necessary due to unforeseen circumstances.

Decanting

There is another option if the terms of an irrevocable trust are no longer relevant that can help to achieve your goals. Think of decanting a bottle of wine, where you pour the wine from one bottle to a different bottle (decanter). When you decant a trust, you are essentially forming a new trust and pouring the assets from the old trust into the new one.

Now, of course the goals of decanting wine and decanting a trust are different. You decant wine to aerate the wine and reduce sediment, you decant a trust to change the terms of the trust to fit a current or future need. Decanting a trust, like a TEDRA has several limitations and should only be used if it is absolutely necessary, but it can be a great tool to make changes that will benefit the parties involved.

Professional Competent Estate Tax Advice

Currently, the gift, estate, and generation-skipping transfer (GST) tax exemption are high and few people have to worry about the consequences of these taxes. However, the current exemptions are scheduled to sunset in 2025 and revert back to half their current level.

The tax code is a moving target that congress can change on a whim. Due to the ever-changing tax code and unpredictable changes in our lives, it is advisable to have plans in place that will account for possible changes in the future.

Obviously, even as experts on the tax code, we cannot predict every possible change in the future. However, we keep a constant eye on congressional proceeding and keep in contact with many different players in this area that will allow us some predictability of possible changes.

Many people look at the gift, estate, and GST tax exemption (which is currently over $10 mill. Per person) and decide they do not need any tax advice on their estate planning because their net worth is below that number. While having a net worth below the exemption makes your tax planning different, there is still some planning that may be beneficial for many reasons.

One is if you or your children live in a state that has an estate tax. Through proper planning, we can help you significantly reduce or eliminate your estate tax liability. Another reason is what was discussed above, the code is constantly changing and if we use some simple techniques now, we can combat those changes in the future that may make your estate taxable.

Unified Credit & Gift Tax Considerations

The unified credit is something that many people do not truly understand, although it is something that is fairly simple. The unified credit does exactly what it says, it unifies three different tax credits. The gift tax, estate tax, and GST tax are three separate taxes that can be assessed on a person or an estate.

The unified credit brings the three together and allows for a single number that will be allowed to be exempted from taxation. So, if you make a gift during life that has to be reported, it will be counted against your unified credit, leaving less upon your death to claim against your estate.

The gift tax is something paid by the person giving a gift to someone else. The gift tax is not paid by the person receiving the gift. Many gifts will not count against your unified credit and will have no tax due. However, a gift tax return will still need to be filed unless the gift qualifies for exclusion. There is an annual exclusion under the code that allows you to give gifts of up to the amount of the exclusion on annual basis to as many people as you want without reporting the gift.

This will allow you to give gifts that not only do not have to be reported, but they also do not count against your unified credit. By making gifts during life you may be able to reduce the size of your estate to a point you will not have an estate tax liability.

As you can see from the previous paragraphs, these taxes can be difficult to understand and may have huge consequences for your current assets and your estate. This area of the tax code is complicated but allows for great planning opportunities. We will help you come up with a plan that is as simple as possible while taking advantage of planning opportunities that will allow you to minimize your tax liability.

Leave A Legacy To Your Favorite Charitable Organization

Donating to charities is something all of us likely take part in at some level, and many of us wish we could do more for the charities we believe in. Although we generally advise that a tax deduction should not be your main motivation for charitable giving, it is one of the benefits of such gifts.

Charitable giving can have many benefits, both for tax savings and as part of your estate plan. If you are fortunate enough to have the means to make some larger charitable donations either outright, in trust, or as a part of your estate plan we will help you to get the best tax treatment possible.

We will help you identify charities to give to, making sure you are able to take full advantage of your donations. We can help you decide how to structure your donations as well and which assets should be donated.

There are many different ways to give to charity, there are donations of property, cash, securities, and any of these donations may be appropriate and offer large tax deductions depending on your circumstances. We are experts in both the tax code and asset transfers, which allows us to come up with creative transactions that will allow for maximum benefits.

How To Fund Charitable Requests

Charitable Trusts

Charitable Trusts can be used in different ways to allow you to have access to assets for a period of time while leaving the remainder to one or more charities. These gifts can be made during your life, or at your death and the structure of the trust can be flexible to allow for different types of gifts. Charitable trusts can be used in many different estate planning strategies, and are an effective tool to allow for both income tax deductions during life and a reduction in estate taxes.

Charitable Foundation

A charitable foundation can be established by anyone. However, because of strict distribution requirements, it is generally best for high net worth clients that want to make large donations to multiple charities while maintaining control of the assets in the foundation. Forming a charitable foundation to give back to your community can be incredibly rewarding, but it is a complex entity that requires you to follow strict rules laid out in the Internal Revenue Code. We are very familiar with these provisions of the code and will be there to navigate it with you to ensure your compliance.

Donor-Advised Funds (DAFs)

DAFs are a great alternative to a charitable foundation and will allow you to keep some control over your assets while making donations to charitable organizations. A DAF is not as complicated as a charitable foundation, but may not give as much flexibility to the donor in the end. The main factor to look at in choosing between a foundation or a DAF is likely to be the value of the assets donated. A DAF is going to provide more flexibility than just making a charitable donation, but less than a foundation. But, a DAF also will not have as strict of rules when it comes to required distribution.