Before It’s Too Late - Eric Gullotta


Estate planning without heirs

The simplest estate plans to create are those where a married couple has adult children and everyone gets along. The scheme is usually straight forward – all to the surviving spouse and then to the kids equally with one of the children acting as successor trustee and executor. But many people who prepare estate planning documents don’t have the family described above.  What do they do?

There are two main parts to an estate plan; (1) Who gets your stuff and (2) Who is in charge of handing your stuff out.  Both are very important and are often the two most debated aspects of a person’s estate plan. So what do you do if you don’t have friends or family to fill either or both of these areas?

If you don’t have close friends or family that you want to leave your assets to, you are not alone.  Some people don’t want to leave their assets to their friends or family because those who would receive the inheritance are already successful, are not close to them or flat out hate them, believe they are not deserving, or that they will squander the money.

Whatever the reason, if you fall into this category you could consider charitable giving.  Providing for a charity is often referred to as a legacy gift, which is a donation made at death.  Besides being generous, the gift may allow you to reap real benefits while you are alive.

Some charities will consider you to be “VIP” at their fundraising events.  They will provide you with recognition for your generosity and treat you very well. If you don’t have family or friends in your life, this connection can be very powerful and rewarding. You are also given the opportunity to see how the charity operates and can see how your money will be used.  If you’d like, you can condition your gift by restricting the manner in which your money is used. For example, you could make a gift to a local organization like Becoming Independent, but require that it only be used for their arts department, transportation or community living support.

Another real benefit may come in the form of current income tax reduction. Without getting into the details, there is a way to make a gift to a charity today, retain control and use of the assets while you are alive and at the same time get a current tax deduction during your life for a gift made at your death.  This can be a very effective tool for those who are interested in charitable giving. Consult with your tax advisor and estate planning attorney to learn more.

If you don’t have a trusted friend or family member who can handle your affairs after you die, don’t let that stop you from moving forward with your estate plan. The easiest solution is to name a professional trustee. There are two basic types of professional trustees; (1) Trust departments at banks and (2) Local individuals who are in the business of being a professional trustee.

The main benefits of using a bank’s trust department is that they are experienced, and they are going to do the job by the book. The downside can a lack of flexibility or personal connection. If fact, the person handling your trust may change over time as bank employees change. They are also usually the most expensive.

A local individual professional trustee has the same benefits; accountability and experience but they also have the ability to be flexible and personal and are often less expensive than bank trustees.

Don’t let your estate planning stall out because you don’t have the key players in place; There are options.

Eric S. Gullotta, JD, CPA, MS (Tax) focuses on estate planning and taxation law. His office is located at 232 West Napa Street, Suite A, in Sonoma. Contact him at 938.7234 or visit Gullottalaw.com.

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