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WHAT DO YOU NEED TO KNOW? HOW DO YOU START YOUR ESTATE PLAN?
By Harold S. Small, J.D., CPA
Through a series of articles (including this one), members of the Endowment Committee of Congregation Beth Israel (CBI) have started the process of educating members about some of the benefits of charitable giving and providing for the future of CBI and its members through its Endowment Fund. Hopefully, you have started to understand the benefits which you may enjoy and the significant benefit that you can provide to CBI and future generations of members. The next step is to start your estate plan, or if you already have one, review how you can improve it.
The basic tools of estate planning involve wills, living trusts, life insurance, gifting to family members, and charitable giving. To begin your estate plan or to revise it, you need a will (a document that directs the distribution of assets at the time of your death that are owned by you at the time of death) and an inter vivos trust (frequently referred to as a living trust) that directs the time and manner for distributions of income and principal and the persons and entities that will receive distributions.
Consideration needs to also be given to the gifting and transfer of assets to family members. Gifting can remove assets from your estate, resulting in minimizing estate taxes and other benefits. You should also consider gifting to CBI and other charitable organizations by providing for current charitable contributions as well as funding endowment funds that provide for the future.
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The living trust that you create can indicate the ages at which you want your children, grandchildren, or others to receive distributions of income and principal. When you are concerned about the youth or indiscretion of beneficiaries, you can direct the retention of assets for a lifetime with a Trustee being given discretion regarding distributions to or for their benefit.
Also, within wills and trusts, you can direct the distribution of assets to charitable organizations either as a direct distribution, or following the death of a succession of named individuals (e.g., upon the death of the last of your children and grandchildren).
Some of the planning may involve the creation of liquidity that can come from life insurance. Life insurance does not solve every problem in estate planning, but it does assist in satisfying liquidity needs, paying estate tax obligations, and can be very useful in charitable giving.
For many years there was a perception that trusts are for the "rich." Over the past thirty years there has been a substantial change in the usage of trusts as well as the public perception with regard to circumstances where they can be used. One of the major reasons is a new understanding that trusts can be of significant assistance during a period of incompetence or mental incapacity of the person(s) who created the trust.
Even when you believe that your estate does not need or require the use of a trust, you need to re-think your situation. For example, what happens if you are not able to handle your financial affairs? Have you considered who will take care of your assets and your financial decisions for you? Without a trust it may be necessary for a conservatorship to be created which will cost significant amounts for fees and costs that are unnecessary. Also, what happens in the event of a disaster where all of the persons important to you die prior to you and prior to your change of the directions in your trust? You should consider a gift to the CBI Endowment Fund if and when that circumstance occurs.
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Also, as a part of your planning, consideration should be given not only to the type of trust to use, but also whether a charitable lead trust or charitable remainder trust may provide estate and/or income tax benefits for you and/or your family members. By designating CBI and providing for a charitable gift to CBI, you can also benefit future generations of the Jewish people.
This article is not intended to answer every question regarding the start and/or improvement of your estate plan, as space does not allow a complete discussion of all issues. However, it should help you to pursue this area for your own benefit and peace of mind and for the benefit of your family and loved ones.
You need to understand that the law in this area has changed considerably over the past few years and it is important that you dust off your documents, determine what changes have occurred in your life and family, then contact an attorney to assist you in fulfilling your needs and desires and determine whether a gift to the CBI Endowment Fund may be in your interest and that of CBI.
Shalom,
Harold S. Small, J.D., CPA
If you are interested in a confidential appointment to explore ways in which you may wish to make an endowment gift, please contact Stuart Simmons, Executive Director, at 858-535-1111 ext. 3113.
Merle Brodie, a member of our congregation and our Endowment Committee, serves as Director of Philanthropy at the Jewish Community Foundation. If you are interested in learning more about tax saving strategies through charitable giving, please call Merle at 858-279-2740.Return to articles about endowment
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