Is Your Estate Plan Underpowered?

If you have substantial assets, you may need more than a will to secure financial protection for your family. A will allows you to arrange only for the future transfer of assets to your heirs. It does not assure you how well those assets will be managed, nor will it help your children avoid paying unnecessary estate taxes when your surviving spouse dies.

Managing the assets you leave behind could be an overwhelming task for a financially inexperienced spouse or other heir. As a result, imprudent investment or tax decisions may be made, diminishing the principal amount and jeopardizing your family's income source.

A Trust To Protect

You can protect the financial well-being of your family by arranging in advance how your assets will be managed after you die. By establishing a Trust Under Will, you appoint a trustee to be responsible for managing certain assets on your beneficiary's behalf.

You arrange for the trust while planning your estate, specifying who will benefit from the trust assets. Then, use your Will to place the assets you want in the trust. The trustee is legally required to manage your assets prudently for the beneficiaries of the trust and to follow the instructions you provide in the legal agreement.

A Trust To Control Taxes

Federal estate taxes on assets you leave to your spouse are easily avoidable under the tax law. However, the same law makes estate taxes difficult to avoid when those assets eventually pass on to your children. Only $675,000 in assets will easily escape taxation in 2001. (This figure rises to $1 million in 2002 and rises to $3.5 million in 2009 and later. Under the 2001 federal tax legislation—The Economic Growth and Tax Relief Reconciliation Act of 2001—the $1 million limit returns in 2011.)

Reducing the potential tax burden on larger estates requires one or more trusts specifically designed to minimize estate taxes. Trusts Under Will are suited for such estate-tax-saving strategies. A Trust Under Will will both assure future income for your family and provide them with significant estate-tax savings.