Estate Planning Continued - Planning for First Death and Second Death
Oct 04, 2011
Regardless of the form you select (either last will and testament or revocable living trust), there are some components that will be necessary as a part of your planning. Usually, husband and wives create "mirroring" documents, in that they will work together, depending on who passes first and what happens based on that. Think of the documents working on levels: what happens at first death, and what happens at second death.
The primary focus at first death is to ensure two things:
1) that the surviving spouse has access to the income from the trust property; and
2) that there are available federal estate tax protection vehicles ready to be used.
* THERE MAY BE STATE ESTATE TAX LAWS TO TAKE INTO CONSIDERATION AS WELL. IT IS VERY IMPORTANT TO DISCUSS THIS WITH YOUR QUALIFIED ATTORNEY.
The primary focus at second death is to figure out how you would like your assets to pass to your heirs. This is unique to every family. So, your work in planning will involve how to complete the construction of your final distribution of assets to your children. A "fair and equitable" distribution of assets is very important to consider here, especially with farming and non-farming children. Your planning will also involve consideration of what happens should one of your children have an untimely death and pre-decease you and you are unable to revise your documentation. This is not something anyone wants to think about; however, it is important to have a complete plan in place.
Disclaimer: This publication provides a general overview of various topics and is strictly for informational purposes only. The reader should consult a qualified professional for advice based on his or her specific circumstances. AgCountry Farm Credit Services and the writer of this blog make no representations as to the accuracy or completeness of any information on this site or found by following any link on this site, and shall not be liable for any errors or omissions herein or for any losses or damages resulting from the display or use of this information.
Required Disclosure Pursuant to IRS Circular 230: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code; or (2) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.