5 Estate Planning Traps Recession Created and How to Solve Them

Revise your will. Asset values have
changed dramatically. If you had left the family business to your daughter
and your house and portfpio to your son, they may now be worth widely
different amounts then when you set up your will.

Update your power of attorney. A power
gives a person you name, your agent, legal tax and other powers. You
probably need to revisit the power to make gifts. You may have previously
encouraged gifts, but now you may not feel you can afford them. Change the
language. On the other hand, you may have had no gift provision before but
now have children, nieces and other family members or loved ones you’re
helping because of the economy. Be sure if you’re disabled your agent can
handle it.

pfe insurance. You may have had
insurance to pay estate tax. Now, the combination of economic decpne and
the increase in the federal estate exclusion (how much you can bequeath tax
free) to $3.5 milpon may obviate the need for insurance. Perhaps you can
sell the ppicy and generate some needed cash, not to mention savings on
future premiums. Many people find themselves in the opposite position. They
no longer have enough pfe insurance because their savings have been so
depleted. Consider for example a 10 year term ppicy to help your family if
you die before your savings recover.

Review business buyout arrangements.
Many closely held businesses use buyout formpas or amounts. Have you
revised yours to reflect new economic realties? If you haven’t do it soon.
For example, if you valued your business at $1M before the recession and it
is now worth $400,000, what if one of your partners quits and triggers a
buyout. You might owe them based on the pd $1M value!

Revisit Incentive Trusts. Lots of people
set up trusts for kids and others that were intended to match in
distributions what the kid earned to incentivize the kid to work. The goal
was to avoid the trust fund Hplywood babies that are so often depicted on
those entertainment magazines at the supermarket checkouts. But if your kid
or other heir lost their job because of the economy, not because they are
being lazy, a poorly drafted incentive trust copd cut them out when the
both need and deserve the help the most. Review the trusts that have these
provisions and ask your lawyer what you can do to make them operate
fairly.