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What are your goals for building an estate plan?

by Jon Windham Charlotte Business Journal 2/5/2016

Successful planning, whether for exercise, business strategy or marketing, often hinges on a focus on the core — the key factors that produce results. Estate planning is no different. It requires identifying and focusing on the core issues most relevant to your estate to be effective.

It’s tempting to minimize the importance of estate planning. After all, the unlimited marital deduction allows you to leave all or part of your assets to your spouse free of federal estate tax.
The federal estate tax exclusion keeps going up with inflation. (It’s $5.45 million for 2016.) And the concept of portability means that if your spouse passes away, you may be able to use your spouse’s exclusion as well as your own.

Given all that, who needs estate planning?

The reality is you need an estate plan no matter the size of your estate. Some of the most important planning is aimed at making the administration of your estate and the transfer of your business interests as efficient as possible, both to benefit your finances and to preserve family harmony.

Drilling down to examine the fundamental issues that affect your estate planning goals can make a real impact. Here are some of the core aspects of your plan that warrant a look this year.

• Fiduciary designations: Consider carefully who will oversee the settlement of your estate (the executor), who will manage and distribute your trust assets (the trustee), and who will care for your young children (the guardian). Review the duties for each role to select the best individual or corporate fiduciaries. Inevitably, changes to your assets and family dynamics will call for periodic review of these designations.
• Beneficiary designations: Assets such as life insurance, IRAs and 401(k) accounts are often a large percentage of one’s estate. Be sure to coordinate who you name as beneficiaries with your estate plan to allow the plan to function as intended. For instance, you may wish to create a trust for your young children and name it as the beneficiary of your life insurance, instead of naming the children as beneficiaries directly. Your estate adviser can describe the pros and cons of this approach.

• Titling of assets: The specific way that assets are held, or titled, will impact the efficiency of the probate process and the funding of your estate plan. Probate — the legal process of settling an estate and transferring assets — does not generally deserve its bad reputation. Understanding the probate process, and what assets are subject to it, often helps to place concerns in the proper perspective.

• Tax exposure: An assessment of tax exposure is a core tenet of any estate plan. The estate tax rules are complex, and there may be tax implications you haven’t considered. The top federal estate tax rate of 40% can take a substantial bite from an estate. Even the “portable exemption” I described above is not automatic. It comes only after you’ve made the proper elections on the estate tax return of the first spouse to die. That return must be filed even if no tax is due.

• Business succession: For business owners, the value of their businesses is often a large component of their estate. If you die or become incapacitated, who is going to own your business? Who will manage it? These questions can be especially challenging for a family-owned business. But the time to consider them is now, not when you become unexpectedly ill.

A thorough review of these issues can go a long way in strengthening the core of your estate plan in 2016.
Attorney Jon Windham with Horack Talley in Charlotte focuses on trusts and estates for individuals and families, and corporate formation and governance. He can be reached at (704) 377-2500 or

Jon Windham was a contributing author for the Charlotte Business Journal's Estate & Financial Planning special report. His column, "What are your goals for building an estate plan?" originally appeared in print and online on February 5.

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