Our Story about Estate Planning

Prologue

Estate Planning…sounds like Vanderbilts and Rockefellers, very wealthy folks.

Estate planning is a scary phrase, but all of us have an estate. It’s what we own when we die. One way or another your estate accumulates, and you have to give it back when you die. If no estate planning is done by an individual or a family, the federal and state governments get an early look at your estate for taxation…we call that “unplanned giving.”

Chapter One

My parents had a farm that they would retreat to almost every weekend. When their children, my sister and I, were more or less settled, they began a process of gifting the farm to us, using the allowable tax exempt dollars per person each year. My Dad died, and my Mother used the farm less and less. My sister lived in Virginia, I was headed to Chatham. As Mother approached 90, my sister and I sold the farm. The value had grown by leaps and bounds since our parents bought the farm in 1946, so my sister and I faced sizeable capital gains taxes.

Our estate planning lawyer suggested we put the proceeds from the sale into a Charitable Remainder Trust. The Trust provides significant income to us as long as we live. At our deaths (last to die), the investments in the Trust are distributed to our chosen charities (colleges, church, hospital). This allowed us to avoid all Capital Gains taxes on the sale of the property and also gave us a sizable Charitable Deduction from our income taxes spread over a number of years following setup of the Trust.

Chapter Two

This seemed like a win-win situation except that our children would lose a portion of their inheritance (the proceeds of the farm sale would go to our favorite charities rather than to our children). We solved that by purchasing a life insurance policy on us equal in value to the farm sale amount. That policy is in our Irrevocable Life Insurance Trust. Income from the Charitable Remainder Trust more than pays the premiums on the insurance policy and also provides some income to us for our lifetime. At our last to die, the children receive equal shares of the insurance policy benefit and our chosen charities benefit from the Charitable Remainder Unitrust distribution. This is indeed a win-win.

Epilogue

Lots of people own property or stock that has grown in value over the decades. Estate Planning Attorneys, who understand the current laws and rules about taxation, should be able to help you plan estate documentation so as to avoid some taxation and preserve your estate value for future generations and also keep plans updated as laws and rules change.

We are delighted that, with the help of our lawyer, we have developed a plan that avoids considerable death taxes, protects our children’s inheritance and allows us the opportunity to contribute to our favorite non-profits. St. Christopher’s is high on that list. After what God has given and is giving to us, is there a better way to give back to God?

Also important is to hold Family Conferences periodically so all children are aware of plans for the future. They can pass along to grandchildren.