Wealth Transfer Planning

When considering how to preserve and plan for wealth transfer between generations or individuals, we first and foremost need to understand the clients’ goals and objectives. Only with that solid foundation can we help advise on the multitude of complex issues that are involved. Proposing any fancy techniques that may work from a tax perspective, but simply don’t feel right to the client, leaves clients cold and their most fundamental concerns unanswered. As with all other areas of our practice, we approach wealth transfer planning with a 3 Step Process:

Step One – Discovery & Diagnosis

Here, we first seek to understand the players: who’s who, and their individual and family goals and objectives. We also do a comprehensive review of all assets and how they’re held, review tax issues, understand client’s tolerance for complexity, consider family business interest. We also try to understand the money. How much is there? How much does the person or family need for their lifestyle – now and in the future? Who are the intended beneficiaries of the wealth? And, whether there is philanthropic interest?

As we begin the Discovery & Diagnosis process, we encourage our clients to read our friend Gregory Englund’s little gem of a book: “Beyond Death and Taxes: A Guide to Total Wealth Control” and its sequel “Seasons of Decision”. (For more resources on Estate and Wealth Planning click here.)

Step Two – Design Options

We like to provide clients with a menu of options. Fundamentally, the tools and techniques that may be employed can help people and families with income tax planning needs;, retirement planning and ultimately estate tax planning. But these tools are only solutions looking for a problem – so – we always harken back to the goals and objectives. Since we are attorneys (and not financial advisors or accountants), we work closely with those other professionals in formulating and implementing any strategy.

The design options are vast and change constantly. We have not, therefore, attempted to list or describe all of those that are available and often employed, but instead list some of those commonly employed (which we affectionately refer to as the ‘Alphabet Soup’).

Irrevocable Life Insurance Trust (ILIT)
Grantor Retained Annuity Trust (GRAT)
Grantor Retained Income Trust (GRIT)
Charitable Remainder Annuity Trust (CRAT)
Charitable Remainder Uni-Trust Trust (CRUT)
Family Limited Partnership (FLP)
Limited Liability Company (LLC)
Qualified Personal Residential Trust (QPRT)
Qualified Domestic Trust (QDOT)
Generation Skipping Trusts (GST)

For a comprehensive list, see InKnowVision’s Periodic Table of Estate Planning and Business Planning Elements here.

The design phase can include extensive financial modeling (by financial professionals) to show the effect of any of these techniques on income and balance sheet basis as well as tax effects.   Agreeing on the assumptions for these models is of course critical to their usefulness.

Step Three – Implementation and Maintenance

Like the other work we do, the implementation phase includes setting up entities and drafting certain vehicles, like trusts.  There are transaction costs associated with the implementation and maintenance of any of these strategies, all of which are discussed openly with the client before proceeding.

If you have any questions or we can be of assistance, please do not hesitate to contact us at (617) 716-0300 or info@squillace-law.com.