What does an estate planning attorney do?

Drafting wills

A will is a legal document that outlines an individual's wishes for the distribution of their assets after their death. It is a cornerstone of any comprehensive estate plan. An estate planning attorney plays a crucial role in helping clients create a legally valid will that reflects their unique circumstances and desires.

The process of drafting a will involves several steps. First, the attorney will gather information about the client's assets, liabilities and beneficiaries. They will discuss the client's goals and preferences for the distribution of their estate, including any specific bequests or charitable donations. The attorney will also review the client's family situation and identify potential issues that may arise, such as providing for minor children or dealing with blended families.

Once the attorney has a clear understanding of the client's wishes, they will draft the will using legal language that ensures the document is enforceable and minimizes the risk of challenges or disputes. The will should clearly state the client's intentions, name an executor (also commonly called a “personal representative”) to manage the estate and specify how assets should be distributed among beneficiaries.

In addition to drafting the will, the estate planning attorney will ensure that the document is properly executed according to state laws. This typically involves the client signing the will in the presence of witnesses, who must also sign the document. The attorney will also provide guidance on storing the will safely and making sure key individuals know where to find it.

Establishing trusts

Trusts are powerful estate planning tools that can help individuals protect their assets, minimize taxes and provide for loved ones. An estate planning attorney can assist clients in establishing various types of trusts based on their specific needs and goals.

One common type of trust is a revocable living trust. This trust is created during the client's lifetime and can be modified or revoked at any time. The client serves as the trustee and beneficiary of the trust while they are alive, and the trust document specifies how the assets should be managed and distributed upon the client's death or incapacitation. A revocable living trust can help avoid probate, maintain privacy and provide flexibility in managing assets.

Another type of trust is an irrevocable trust, which cannot be easily modified or revoked once it is established. Irrevocable trusts are often used for tax planning purposes, as they can remove assets from the client's taxable estate. They can also be used to protect assets from creditors or to provide for beneficiaries with special needs without jeopardizing their eligibility for government benefits.

Charitable trusts are another option for clients who wish to support philanthropic causes while also receiving tax benefits. These trusts can be structured as charitable remainder trusts, which provide income to the client or other beneficiaries for a specified period before the remaining assets are donated to charity, or as charitable lead trusts, which make donations to charity for a set term before passing the remaining assets to beneficiaries.

An estate planning attorney will work with clients to determine which type of trust, if any, is appropriate for their situation. They will draft the trust document, ensure it is properly funded, and provide guidance on the roles and responsibilities of the trustee and beneficiaries.

Designating powers of attorney

In addition to planning for the distribution of assets after death, estate planning also involves preparing for the possibility of incapacitation during life. An estate planning attorney can help clients designate trusted individuals to make important financial and medical decisions on their behalf if they become unable to do so themselves.

A durable power of attorney for finances allows the client to appoint someone to manage their financial affairs, such as paying bills, managing investments and filing taxes, if the client becomes incapacitated. The attorney will draft the document, specifying the scope of the agent's authority and any limitations or restrictions.

A health care power of attorney enables the client to name someone to make medical decisions on their behalf if they are unable to communicate their wishes. This document may be accompanied by a living will (also called an “advance directive”), which provides specific instructions regarding end-of-life care preferences, such as the use of life-sustaining treatments.

The estate planning attorney will work with the client to identify suitable candidates for these roles and ensure that the documents are properly executed and stored. They will also advise the client on how to communicate their wishes to their designated agents and family members to minimize the risk of confusion or conflict.

Probate and estate administration

When an individual passes away, their estate often goes through the probate process, which involves validating the will (if there is one), identifying and inventorying assets, paying debts and taxes, and distributing the remaining assets to beneficiaries. An estate planning attorney plays a key role in guiding the executor or personal representative through this complex and often time-consuming process.

If the deceased person had a well-drafted will and properly funded trust, the probate process may be streamlined or even avoided altogether. However, if there is no will or if certain assets were not transferred to a trust, the estate may need to go through probate court.

The estate planning attorney will assist the executor in filing the necessary legal documents, such as the petition for probate, and will provide guidance on the executor's fiduciary duties and responsibilities. They will help identify and value the estate's assets, including real estate, investments and personal property, and will ensure that all debts and taxes are paid before the remaining assets are distributed to beneficiaries.

If any disputes arise among beneficiaries or creditors, the estate planning attorney will work to resolve these conflicts and protect the executor from potential liability. They will also prepare and file the necessary tax returns, including the estate tax return if applicable, and will provide guidance on the tax implications of estate distributions.

Tax planning

Estate planning attorneys play a crucial role in helping clients minimize their tax liabilities and preserve more of their wealth for their beneficiaries. They stay up to date on the constantly changing federal and state tax laws and regulations and advise clients on strategies to reduce their tax exposure.

One key area of focus is minimizing estate taxes, which can be a significant burden for high-net-worth individuals and families. The attorney will work with clients to develop strategies for reducing the size of their taxable estate, such as making lifetime gifts to beneficiaries, establishing irrevocable trusts or utilizing the annual gift tax exclusion.

Another important consideration is the income tax implications of estate planning decisions. The attorney will advise clients on the tax consequences of different asset transfer methods and will help structure transactions in a way that minimizes income tax liabilities for beneficiaries.

Charitable giving can also play a role in tax planning for estates. The attorney will help clients explore options for making tax-advantaged charitable donations, such as establishing donor-advised funds or charitable trusts, which can provide tax benefits while also supporting philanthropic goals.

In addition to estate and income taxes, the attorney will also consider other tax implications, such as property taxes and state-specific taxes, and will work with clients to develop a comprehensive tax planning strategy that aligns with their overall estate planning goals.

Business succession planning

For clients who own businesses, estate planning takes on an additional layer of complexity. An estate planning attorney can help these clients develop a comprehensive succession plan to ensure a smooth transition of ownership and control of the business to the next generation or other designated individuals.

The first step in business succession planning is to identify the client's goals and objectives for the future of the business. The attorney will work with the client to determine who will take over the business, whether it will be family members, key employees or outside buyers, and will help develop a timeline for the transition.

Next, the attorney will review the business's legal structure and organizational documents, such as partnership agreements or corporate bylaws, to ensure they are updated and align with the succession plan. They may recommend changes or updates to these documents to facilitate the transfer of ownership and control.

The attorney will also help the client explore different transfer methods, such as gifting shares, establishing a buy-sell agreement or creating a business trust. Each of these options has different tax and legal implications, and the attorney will provide guidance on the most appropriate strategy based on the client's specific circumstances.

In addition to transferring ownership, the succession plan must also address the transfer of management responsibilities. The attorney will help the client identify and groom potential successors and advise on strategies for training and transitioning these individuals into leadership roles.

Finally, the estate planning attorney will ensure that the succession plan is properly integrated with the client's overall estate plan. This may involve updating the client's will or trust documents to reflect the business succession plan, and ensuring that the plan aligns with the client's broader goals for their estate and beneficiaries.

By working with an experienced estate planning attorney, business owners can ensure that their hard-earned legacy is preserved and that their business continues to thrive even after they are no longer at the helm.

Deciding when to hire an estate planning attorney is an important consideration for anyone looking to protect their assets, provide for their loved ones and ensure that their wishes are carried out in the event of incapacitation or death. While it's never too early to start the estate planning process, there are certain life events and circumstances that may make it particularly important to seek the guidance of a qualified legal professional.

• Marriage or divorce. Getting married or divorced is a significant life event that can have major implications for your estate plan. An estate planning attorney can help you update your existing plan or create a new one that reflects your changed circumstances. This may include updating beneficiary designations, creating a new will or trust or revising your powers of attorney to reflect your new marital status.
• Having children. The birth or adoption of a child is another important milestone that should trigger a review of your estate plan. An estate planning attorney can help you designate a guardian for your minor children in the event of your death or incapacitation and ensure that your assets are distributed according to your wishes to provide for their ongoing care and support.
• Acquiring significant assets. As your wealth grows, so too does the importance of having a comprehensive estate plan in place. An estate planning attorney can help you protect your assets from potential creditors, lawsuits and other risks, and minimize your tax liability through strategic gifting and other planning techniques.
• Starting a business. If you are an entrepreneur or small business owner, an estate planning attorney can be an invaluable partner in helping you protect your business and ensure its continued success. This may include creating a buy-sell agreement to govern the transfer of ownership in the event of your death or disability, or establishing a succession plan to ensure that your business can continue to thrive under new leadership.
• Facing a serious illness. If you or a loved one are diagnosed with a serious illness, it's important to have your estate plan in order. An estate planning attorney can help you create or update your advance health care directive, which specifies your wishes for medical treatment and end-of-life care and designates someone to make health care decisions on your behalf if you are unable to do so. They can also help you ensure that your financial affairs are in order and that your assets will be distributed according to your wishes.
• Approaching retirement. As you near retirement age, it's important to review your estate plan to ensure that it still reflects your current wishes and circumstances. An estate planning attorney can help you update your plan to include provisions for long-term care, minimize your tax liability and ensure that your assets are protected and distributed according to your wishes.
• Experiencing a major life change. Other major life changes, such as moving to a new state, receiving a significant inheritance or experiencing the death of a spouse or other loved one, can also trigger the need for estate planning guidance. An attorney can help you navigate these changes and ensure that your plan is updated to reflect your new circumstances.

In addition to these specific life events, it's generally a good idea to review your estate plan every few years to ensure that it still meets your needs and goals. An estate planning attorney can be a valuable partner in this process, providing ongoing guidance and support to help you achieve your long-term objectives. By working with a qualified estate planning attorney, you can ensure that your assets are protected, your loved ones are provided for, and your wishes are carried out, giving you peace of mind and security for the future.