4 Corporate Drive, Shelton, CT 06484     Phone: 800.529.9295     Web: www.ncnp.com
 

ESTATE PLANNING

November 2005

To Our Clients and Friends:

Planning for the time when we’ll no longer be around is something we all need to do, yet it’s a task that’s easy to postpone. Typically no one is pushing us to make decisions, and we like to think that we’ll always have "tomorrow." However, it’s probably not difficult for you to think of someone in your own family or in a friend’s who waited until it was too late. Then the remaining family members had to live with the emotional and financial damage that comes from a lack of planning.

There Really Is No Time Like the Present

Regardless of whether you’ve done any estate planning in the past, now’s a good time to make sure everything is in order. For example:

• Do you have an up-to-date will, durable power of attorney, revocable trust, power of attorney for health care, and directive to physicians (or living will)?
• If you’re married, do both of your wills provide that everything passes outright to the surviving spouse? If so, and your combined estates are likely to exceed $1,500,000 in 2005 or $2,000,000 in 2006 (including the value of such assets as personal residences, retirement plans, and life insurance policies), the estate of the surviving spouse is probably needlessly going to owe estate tax (which starts at a 37% rate and goes as high as 55%). The most common way to reduce or eliminate this problem is to provide in each spouse’s will for a so-called bypass (or credit-shelter) trust.
• If you have minor children, does your will name a guardian for them?
• Do most of your assets (such as retirement plans and life insurance policies) have a named beneficiary, or perhaps are they held as joint tenants with right of survivorship or in some other manner that causes them to pass outside the control of your will? If so, even though your will provides for a bypass trust, it may not work as intended because of a shortage of assets under the will’s control that can be used to fund the trust.
• If your estate will likely exceed $1,500,000 or $2,000,000 in 2006 (or yours and your spouse’s, $3 million or $4 million in 2006), have you considered additional planning techniques—such as making gifts to family members; transferring life insurance policies to an irrevocable life insurance trust; or setting up a family limited partnership, charitable trust, or qualified personal residence trust—to reduce or eliminate the estate tax that will ultimately be due?
• And finally, are you maximizing the tax-free or tax-deferred advantages of your Roth IRA, traditional IRA, and other retirement plan accounts by carefully choosing who you name as primary and secondary beneficiaries?

We could go on, but you probably get the idea. The point is there are numerous opportunities to save potentially tens or even hundreds of thousands of tax dollars. However, it’s up to you to take the first step. Call us today. We’ll be glad to help you get the process started and to help keep things on track until the task is completed.

Best regards,

Nishball, Carp, Niedermeier, Pacowta & Co.