Stites on Estates

Category Archives: Estate Planning

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Designing Trusts for a Surviving Spouse’s Remarriage

Posted in Blended Families, Estate Planning, Life Cycle Estate and Financial Planning, Trust Administration
In the 90s, when the Internet was new and Bill Clinton still had more tomorrows than yesterdays, the estate tax exemption was $600,000, an amount even Thomas Piketty might think was rather low. In that sort of environment, credit shelter trust planning for married couples felt almost mandatory. We live in a very different world today.… Continue Reading

Designing Incentive Trusts: Adam Smith and The Wealth of Beneficiaries

Posted in Estate Planning, Life Cycle Estate and Financial Planning, Trust Administration
Certainly one of Adam Smith’s core insights in The Wealth of Nations was that incentives matter. I believe examples are everywhere about how Smith was correct – ranging from California water shortages and student loan debt, to tax policy and white collar crime. If incentives matter in these areas, shouldn’t they matter in designing trusts that maximize successful outcomes for… Continue Reading

Design Factors for Your Family’s Trust

Posted in Asset Protection, Estate Planning, Life Cycle Estate and Financial Planning, Trust Administration
These are interesting years in estate planning for families in the Upper Middle and Lower Upper Classes. As a high estate tax exemption has reduced the tax-driven imperatives for using trusts to hold inheritances, non-tax applications of trusts come to the fore. As non-tax issues in trust design assume greater relative importance, what factors should… Continue Reading

Design Options for Education Trusts

Posted in Estate Planning, Life Cycle Estate and Financial Planning, Trust Administration
I often work with “Wealth Creators” who have built substantial wealth themselves, most notably as founders of companies or early-stage employees at startups. I also work with “Inheritors” managing wealth built in prior generations for the benefit of descendants. Although every instance has unique aspects, in general, I find that Wealth Creators have conflicted feelings about what being… Continue Reading

What About the “Stuff”? – Options for Distributing Tangible Personal Property from Estates or Trusts

Posted in Estate Administration, Estate Planning
During an estate or trust administration, it’s easy to divide and distribute financial assets. Distributing tangible personal property (such as furniture, collections, artwork, jewelry, etc.) can be much harder. Executors, trustees, and beneficiaries are usually very surprised by how little household goods and personal property are worth in an estate administration context. Nonetheless, simply because… Continue Reading

Avoiding Family Fights In Estate Administration

Posted in Blended Families, Estate Administration, Estate Planning, Life Cycle Estate and Financial Planning
Estate administration can be a frustrating experience for families and their advisors, because it’s an occasion when families fight. Sometimes the fights are necessary, and unavoidable. Many other times, to a detached observer, the fights seem silly. Whether justified (or not), whether necessary (or not), conflict makes estate administration cost more (even when litigation doesn’t… Continue Reading

Managing Risk: Inheritance Strategies for the Upper Middle Class

Posted in Estate Planning, Life Cycle Estate and Financial Planning, Long Term Care Insurance, Retirement Planning
Several months ago I read Cut Adrift: Families in Insecure Times by Marianne Cooper, a Stanford sociologist. Cooper’s chapters on the extremely professionally successful upper middle class and their project of “doing security” were particularly interesting. These families were operating an increasingly unstable career and social environment, and devoted tremendous energy to enhancing their own financial security.… Continue Reading

Using an LLC to Maintain Privacy When Buying Residential Property

Posted in Asset Protection, Business Planning, Estate Planning
Last week, Business First of Louisville published a report and slideshow on the top 25 largest residential real estate transactions of the first quarter of 2015 in Jefferson County. It might surprise you to know that a home bought for $646,000 was pricey enough to make the first quarter slideshow. The most expensive home on… Continue Reading

Managing Volatility: Inheritance Strategies for the Lower Upper Class

Posted in Estate Planning, Life Cycle Estate and Financial Planning
This week I’ve been reading Claire Tomalin’s Jane Austen: A Life. That’s risky for me to admit, as surveys show the female/male ratio of “Janeites” runs about 25:1. Mockery from readers may be unavoidable, and even deserved. I think one of the most interesting aspects of Tomalin’s biography is how it shows the Austens and… Continue Reading

Managing Abundance: Inheritance Strategies of the Upper Class

Posted in Estate Planning, Life Cycle Estate and Financial Planning
Broadly speaking, I have observed Upper Class families use three types of inheritance strategies: deferral, ad hoc gifts, and income streams. Deferral is a traditional strategy: pay to raise and educate your child, and then give them not very much (if anything) until they inherit as your survivor. Ad hoc gifts are transfers for a… Continue Reading

The Advantages of Tennessee Trusts: Investment Services Act Trusts

Posted in Asset Protection, Estate Planning
 Hello to everyone reading Stites on Estates.  I recently joined Stites & Harbison as an estate planning attorney practicing in both Tennessee and Georgia.  My inaugural blog post discusses Tennessee Investment Services Act trusts. Tennessee is often at the cutting edge of trust law, as evidenced by its recent passage of laws allowing for the… Continue Reading

A Non-Optional Part of Your Estate Plan: Guardians for Minor Children

Posted in Estate Planning, Guardianship Planning
Whether you’re wealthy or not, and whether your estate planning issues are complicated or simple, if you have a child under age 18, you need a Will, because you should nominate a guardian for your child. The guardian will act for your child (the “ward”) with the range of parental responsibilities and authority you’d have,… Continue Reading

Should You Get a Prenuptial Agreement?

Posted in Asset Protection, Blended Families, Estate Planning, Life Cycle Estate and Financial Planning
Whether or not to get a prenuptial agreement before getting married isn’t an easy decision. The advisability of a prenup turns in large part on whether the default law that will govern the marriage if it ends by death or divorce is agreeable. If you can live with the default rules, a prenup might not… Continue Reading

Use a Total Balance Sheet for Your Estate Plan, Including Invisible Assets and Liabilities

Posted in Estate Planning, Life Cycle Estate and Financial Planning
A financial plan should be a thoughtful alignment of your income, expenses, saving, and asset allocation that makes it more likely you’ll achieve what matters most to you. Your estate plan is financial plan’s autopilot, ensuring that your capabilities carry out your goals, even if you’re not around to supervise things yourself. Using the Quadrant-based life cycle planning… Continue Reading

Demography, Destiny, and Your Family’s Estate Plan

Posted in Estate Planning, Life Cycle Estate and Financial Planning
It’s unclear whether Auguste Comte really said that “demography is destiny,” but you can and should use demographic data to make better estate and financial planning decisions. As we’ve noted, an estate plan often represents a set of predictions about a family’s future, predictions that will be improved when the plan considers the family’s Longevity Distribution. Your… Continue Reading

Give From the Heart and the Head with a Charitable Remainder Trust

Posted in Charitable Planning, Estate Planning, Insurance, Life Insurance, Nonprofit Organizations, Trust Administration, Uncategorized
The holidays always put me in the mood for giving, and I hope to continue that charitable spirit into the New Year with this post on charitable remainder trusts (CRTs). Almost everybody knows that they can claim a deduction on their income tax returns for gifts they make to charities, but many are unaware of… Continue Reading

Adapt an Irrevocable Trust to a New Family Situation With Decanting

Posted in Asset Protection, Estate Planning, Trust Administration
It’s not uncommon for an old irrevocable trust to no longer fit a family’s circumstances, for the simple reason that Yogi Berra was right when he noted that “It’s hard to make predictions, especially about the future.” Trusts provide advantages, including protection from creditors, divorce, or spendthrift behavior. To obtain these advantages, trusts place restrictions… Continue Reading

Homestead Planning for Your Florida Property

Posted in Asset Protection, Estate Planning, Florida Estate Planning, Retirement Planning
Florida offers many advantages as a retirement haven compared to northern states (including no state income taxes and better weather). Another Florida feature (lesser-known but still quite important) is its homestead laws. “Homestead” can be a deceptively complex issue in snowbirds’ estate and tax planning when they finally become Florida residents, including asset protection, property tax savings, and restrictions on… Continue Reading

Supreme Court Denies Creditor Protection for Inherited IRAs

Posted in Asset Protection, Estate Planning, Retirement Planning
Earlier this year, in Clark v. Rameker, 573 U.S. ___ (2014), the Supreme Court resolved a circuit split and delivered bad news for debtors, finding that a debtor’s inherited IRA was includible in her bankruptcy estate. Clark is an important decision because it clarifies that IRA assets inherited by adult children or other beneficiaries are… Continue Reading

Florida Residency Planning for Kentuckians

Posted in Estate Planning, Florida Estate Planning, Income Tax Planning, Inheritance Tax Planning, Retirement Planning
If you are a Stites on Estates reader in a state where it’s cold in the winter, you have probably seen them: people who seem to live in your own neighborhood and golf at your club, but have a car with a Florida license plate. Who are those people? They’re the lucky ones: the Snowbirds… Continue Reading