Business News & TipsAlan S. Moore / L’Observateur / June 1, 1999Estate planning has a well-deserved reputation as a champion estate-tax fighter. If you use a qualified professional to help you plan your estate,you can minimize the estate taxes that will be due someday. Yet the fullvalue of careful estate planning extends well beyond tax benefits. Estateplanning can also provide: Financial protection if you become disabled Care for your assets when you are absent from home for long periods Insurance for your family against financial hardship in case of your premature death and Management of your financial assets after your death.

Published 12:00 am Wednesday, June 2, 1999

Disability Protection Disability doesn’t happen only to other people. You have a one-in-fourchance of someday becoming disabled for longer than 90 days, and the average length of a disability is about a year. The possibility is real that aprolonged illness or an accident could prevent you from continuing to handle your finances.

An estate plan that includes a STANDBY TRUST can prevent a temporary or permanent disability from disrupting your financial affairs. Once you setup this type of trust, your trustee will be on call to take over management of your financial affairs – if ever you become disabled or another triggering event specified in your trust occurs. Your trustee can pay bills,loans, and taxes for you. And your trustee can manage your investmentportfolio and collect your investment income, using your assets for your financial needs whether or not you can be involved in the decision-making process. Later, if you recover from your disability, you can again take overmanaging your assets. The trustee’s care can continue after your deathwith full-time management of all the assets that you place in the trust. Atrust in place before your death can also eliminate or reduce the need for probate of your estate.

Management During Absences Keeping in touch with your investment portfolio usually isn’t difficult as long as you travel for short periods. That can change considerably whenyour business or pleasure travel is prolonged or very frequent. Trackingthe U.S. investment markets from abroad and making long distanceinvestment changes can be difficult and perhaps impossible to manage along with other demands on your time. Estate planning that includes aREVOCABLE LIVING TRUST can be the solution to caring for assets while you are long away from home. With this type of trust, your trustee cantake over responsibility for the full management of your financial assets while you are unavailable.

Also, the trustee will immediately become responsible for your assets on your death and manage them for your family’s or other beneficiaries’ benefit. Or, you can choose to give your trustee the investmentresponsibility as soon as you set up your trust. Because the trust isrevocable, you always have the power to end the trust. You can do it at anytime, for any reason you want. Therefore, you always remain in overallcontrol.

Insuring Family Finances If you include adequate life insurance coverage within your estate plan, you can assure future income for your family. Much more is involved thansimply providing large insurance proceeds. Expert investment managementskills are needed to generate a secure long-term income from the insurance money. Future problems are very possible if your spouse orchildren don’t have experience managing large investment funds. A LIFEINSURANCE TRUST within your estate plan can avoid those problems. Thetrustee will have continuing responsibility for investing your insurance proceeds. That will guard against the possibility of your family runningthrough the assets or becoming the victims of bad investment advice. Thetrustee will also follow your wishes for distributing money to your heirs.

Successor Asset Manager Very likely, your heirs are not prepared for managing the substantial assets you will leave to them. But your estate plan can make sure thatyour assets will be under the long-term care of an experienced, professional investor. You can use your will to transfer assets to aTESTAMENTARY TRUST. With this arrangement, the trustee you name willmanage the trust’s assets exclusively for the benefit of your beneficiaries, who can be your spouse, your children, a charity, or any other individuals you choose. They will receive the money from the trustat the times that you specify. Such a trust often funds the care oreducation of children who are minors.

An estate plan can be effective only if it is customized to fit your specific financial situation and family. And, as your situation and the estate-tax laws change over time, your estate plan will require review and possible revisions. If you want to know more about the non-tax and taxadvantages of estate planning, contact a financial advisor today.

(Alan S. Moore is a financial advisor of Legg Mason Wood Walker Inc., adiversified investment brokerage and financial services firm in New Orleans.)

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