Legacy Wealth Planning

LEGACY WEALTH PLANNING You Need to Determine Now How Your Legacy Will Be Passed On to Your Heirs; If Not, Your Hard Work May Be of No Benefit to Your Family in the Long Run

DEBORAH SEXTON FAYETTEVILLE ARKANSAS ESTATE PLANNING ATTORNEY

Estate planning allows you to make sure your assets will be distributed the way you want them to be and to save as much as possible on estate and other applicable taxes.

Death is an eventuality that most people do not want to dwell on, much less plan for. However, if you delay in planning for the future of your intended beneficiaries, they may not receive what you want them to when you pass away. They may also be subjected to additional administration costs and unnecessary taxes without a proper plan. Estate planning allows you to make sure your assets will be distributed the way you want them to be and to save as much as possible on estate and other applicable taxes.

Basic estate planning is important for everyone. However, if you are a resident in the Fayetteville area and have been fortunate enough to create a strong financial base for your family, then it is vital that you plan for the future. You need to determine now how your legacy will be passed on to your heirs. If not, your hard work may be of no benefit to your family in the long run.

WHAT IS A LEGACY WEALTH PLAN? Legacy Wealth Planning is essential to helping clients preserve their financial wealth using such estate planning instruments as Wills, Powers of Attorney, Living Trusts, Irrevocable Trusts, Living Wills, Family Limited Partnerships and Charitable Gifting Strategies.

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A comprehensive estate plan should always address such matters as who will look after of you and manage your assets in the unfortunate event that you become incapacitated. Another important concern to be addressed is who will care for your children if you pass away while they are still minors.

Most estate plans should include, at the very least, a durable power of attorney and a will. But there are many other legal instruments that can help you plan for your heirs after your death.

An estate planning attorney can assist you in creating the comprehensive plan that will best fit your needs. There are many legal issues that need to be considered and addressed as a legacy wealth plan is developed. This article will address some of the more common areas that estate planning attorneys are well-equipped to handle.

PROTECTING YOUR ASSETS Did you know that when you pass away, legal judgments and certain debts you leave behind still have to be settled from your estate, before your assets are distributed to your heirs? That is why including asset protection in your legacy wealth plan is very important. Your debts can have serious financial consequences for your heirs if your assets are not protected from creditors.

Asset protection

simply means lawfully arranging your assets so that they are not subject to creditor claims.

This must be done in the proper way, as each state has specific laws to protect creditors with judgments from individuals who attempt to transfer

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assets into the names of relatives in order to avoid judgments. As such, asset protection must be planned for well in advance of any threat of judgments. Once your short-term and long-terms financial goals are in place, an estate planning attorney can assist in determining which assets are exempt from creditors. Those that are not, should then be carefully repositioned in a way that will protect them from potential creditors after your death.

PLANNING FOR ESTATE TAXES A very important estate planning issue that affects legacy wealth is estate tax. Currently, you can give a gift or bequeath up to $5.25 million in assets without incurring any taxes. This is known as the personal estate tax exemption. If, however, your total assets exceed that sum, you need a legacy plan that takes into consideration your estate tax liability.

An

effective estate planning attorney can take steps ●

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An effective estate planning attorney can take steps to help you reduce the impact of estate taxes. ●

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to help you reduce the impact of estate taxes.

Unlike some states, Arkansas does not impose an additional estate tax.

In addition to the personal estate tax exemption, many people are entitled to a marital deduction.

This allows married couples to transfer property to each other, either during their lifetime or at their death, without paying federal estate or gift

taxes. When the gifting spouse dies, the value of the property that passes to the surviving spouse will be deducted from the gross estate of the deceased spouse. This amount is unlimited.

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THE BENEFIT OF CHARITABLE DONATIONS The giving of charitable donations is not only rewarding, but it also provides its own tax advantages, as well. To encourage philanthropy, the federal government has created certain tax deductions for donations to qualified charities. This benefit can be put to use in legacy wealth planning.

There are some issues to be considered, however. Whether you gift a specific dollar amount or a set percentage to charity will obviously have an impact on the amount of your assets your heirs will ultimately inherit.

REVISIT YOUR PLAN IF THERE ARE CHANGES IN THE VALUE OF YOUR ESTATE If your financial status has changed markedly since you established your legacy wealth plan, you most likely need to revisit your plan to see if any changes need to be made. If your will or estate plan distributes your estate by percentages, then changes in value will not have any effect. If, however, you left specific

amounts to your

named

beneficiaries,

an

increase or decrease in the value of your estate could have consequences.

For example, if your estate plan donates $100,000 to your favorite charity and the remainder to your heirs, a marked reduction in the value of your estate could very possibly mean your heirs will not get nearly as much as you intend.

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Also consider this scenario: You decided to give your two children different assets with the same value. For example, you leave your son a house worth $500,000 and your daughter stock also valued at $500,000. If the value of either asset has increased or decreased significantly, then the gifts to your children will no longer be of equal value. Therefore, it is important to update your estate plan whenever the value of your assets has changed. It is also important to consider what effect the change in value of your estate may have on your estate tax liability.

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About the Author Deborah K. Sexton As the sole attorney in the Fayetteville law firm of Deborah Sexton Law Office, Deb oversees a practice devoted to providing clients with the best in estate planning.

Deborah Sexton, C.P.A., J.D., L.L.M., combines an extensive background in accounting with a wide range of legal experience to provide her clients with a uniquely practical perspective. An attorney since 1983, she now devotes her practice primarily to estate planning and elder law.

EXPERIENCE After obtaining her undergraduate degree in accounting from Abilene Christian University in Abilene, Texas, she worked in Dallas in public accounting for several years, and then went to the University of Arkansas Law School in Fayetteville. Upon graduating from law school, she went on to obtain an L.L.M. degree in Taxation from New York University.

Deborah Sexton Law Office www.arkansas-estateplanning.com 2766 Millennium Drive Fayetteville, AR 72703 Phone: (479) 443-0062 Fax: (479) 443-2001

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