Planning Potpourri

■ Letters
of Instruction: Minimize family issues by writing a clear letter of
instruction as to your wishes and intent. Often the fights among heirs are over
what each side believes are legitimate and supportable beliefs about what the
parent or other benefactor wanted. Was the loan to help sis buy a house really
intended to be paid back? Who did mom really want to give that diamond necklace
to? Sure, these issues can be addressed (and often should) in a formal
legalistic manner to avoid issues. However, the reality is that many family
disputes could be avoided if the intent were only clear. Many heirs will
respect mom’s wishes, if they only really knew what they were. Write a letter
and discuss it with your estate planner. Have it held in a manner that assures
its privacy until needed (so you can revise it if circumstances change).

■ Special Needs Considerations: Undertaking specific planning to protect
current/future SSI or Medicaid benefits is often the focus of planning.  However, ultra affluent clients might think
that they don’t have a “need” to protect a special heir from the loss of
government assistance. But qualification may not only be about money, but about
entry to vital programs. For affluent clients, especially business owners
facing a lack of liquidity, life insurance held in a trust (ILIT) might nicely
fund a special needs trust (SNT), but then there is the issue of Crummey powers.
You cannot grant the special heir the right to withdraw gifts to the trust
since that may jeopardize qualification. Other approaches to consider might
include: split-dollar loans to minimize gifts to the trust; judicious use of
the lifetime gift exemption for gifts; GRATs and other planning technique that
roll into the trust at future dates to unwind the split-dollar arrangement and
fund other premiums; using the ILIT to guarantee other family loan and sale
transactions for a fee; and so on. Thanks to Catherine G. Turner, CFP, Atlanta, Georgia.