As we wrote in the Autumn 2012 news-letter, we strive to keep things simple for our clients. Some complications can be avoided and some cannot. Just knowing that these conditions exist can help your estate planning go more smoothly.
Ten things that tend to make estate planning more complicated are:
1. Greater Wealth. Larger estates tend to be more complicated because of estate and gift tax issues and the desire of clients to establish a plan that avoids or reduces taxes.
2. Greater Number and Types of Assets. Every asset adds complexity to planning and estate administration. A client who has one bank account that holds $5 mil-lion has a simpler situation than a client who has $5 million spread throughout
multiple accounts, real estate, business interests, airplanes, stocks, bonds, IRAs, and gold coins.
3. Real Estate in Multiple States or Countries. Planning for a second home in another state or country increases estate plan complexity.
4. Blended Families. When the family includes “my” children, “your” children, and “our” children, the nature of the plan can become more complicated to assure that everyone receives the “right inheritance.”
5. Unmarried Couples. State and federal laws provide certain protections to married couples. These laws can be planned around when unmarried couples do their planning together, but such plans tend to be a little more complicated.
6. Non-US Citizen. Federal tax law may complicate planning when a client is married to a non-US citizen.
7. IRAs and 401(k)s. Large IRAs and 401(k)s are special assets because they are taxed deferred and subject to special regulations that can restrict client flexibility.
8. Other Regulated Property. Certain types of property are highly regulated by state or federal law, which adds complexity to an estate plan. Highly regulated property includes restricted stock in native corporations, na-tive land allotments, fishing permits, timeshares, and others.
9. Operating Businesses. Operating businesses should (but rarely do) have an effective succession plan in place in the event the owner passes away. This problem is magnified when the business is a professional practice requiring a special license.
10. Significant Philanthropic Planning. Structuring a charitable gift in the right way to the right charities can increase complexity and require special effort and focus on the part of the client.