A recent article in Forbes is the perfect example of why it’s important to hire an experienced, qualified estate planning attorney.
In the article, a couple set up a complicated estate plan involving:
• a family limited liability company (LLC)
• an irrevocable trust that was designed to benefit his children and grandchildren (Dynasty Trust)
• gifting to avoid and reduce taxes
The way the plan was set up and managed led the IRS to challenge whether the “purported” asset transfers and gifts – and resulted in a significant tax penalty because “their advisers skipped lots of steps” and wanted to “minimize professional fees and thus avoid the meetings.”
The article goes on to reflect on lessons learned from the case, and provide recommendations for choosing and working with an estate planning attorney:
1. Hire good professionals.
2. Adhere to the legal restrictions of the trust or gift you created, such as not mixing personal and business funds.
3. Review and update your plan on a regular basis, and document the review occurred even if you do not make changes.
4. Consult your attorney to ensure that any estate planning documents you created before hiring this attorney are valid, up to date and well documented.
5. All legal documents should indicate the date they were actually signed even if there is a different effective date, with documentation to explain if the dates are different.
6. Don’t wait until the last possible minute to enact complicated estate planning documents. Experts suggest a minimum of 30 days to create and enact a legal document.
7. Tax reporting should be consistent with the legal estate planning documents, and not present contrary facts.
The case involved a wealthy couple with tens of millions of dollars in assets and highly paid attorneys. Whether you are wealthy or of average income and assets, its important to follow best practices to protect yourself – and your assets – from expensive litigation, penalties and fees.
Read the full article: Recent Tax Court Case Has Important Lessons On How To Do Estate Planning Right!
If you have questions about estate planning and how to protect your assets and your loved ones, an experienced estate planning lawyer can advise you on the best options for your situation. To talk to a qualified estate planning attorney in Chicago or Oak Brook, contact the Estate & Probate Legal Group at 630-864-5835.
We serve Cook, DuPage, Kane, Lake and Will counties.
