Avoiding estate planning pitfalls.
A case of outdated strategies.
Avoiding estate planning pitfalls: A case of outdated strategies.
Client profile
Sam Bennett, a single man in his early 60s with no children. His closest heirs were two siblings, each with two children, and a close friend with two young adult children.
Original plan
Sam’s 20-year-old estate plan called for equal, outright distributions among his siblings, friend, and their children, and named an old friend as executor. This outdated setup risked confusion and inefficiency.
Proposed update
With a wealth strategist, Sam planned to:
- Create trusts for his siblings and friend, with their children as remainder beneficiaries
- Name a trusted, current executor familiar with his family and finances
Benefits
Tax efficiency: Trusts can avoid increasing the taxable estates of the siblings and friend, and help to protect assets for the next generation.
Education and control: Parents could guide their children’s inheritance, and trusts can allow for tailored distributions and asset protection.
Executor alignment: A capable executor would minimize confusion and delays.
Outcome
Sam passed away before finalizing these changes. The old plan remained, resulting in:
- An unprepared executor
- Immediate, outright inheritance for the children, risking poor stewardship
- Potential estate tax exposure and lack of creditor protection
- Probate, which compromised privacy and increased administrative burden
Key takeaway
Timely execution of estate plans is essential to protect one’s legacy and beneficiaries.
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Important information
The information contained in this communication is not meant to be a substitute for thorough estate planning and is not meant to be legal and/or estate advice. It is intended to provide you with a preliminary outline of your goals.
Please consult your legal counsel for additional information.
Neither SEI® nor its affiliates provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.
SEI Private Wealth Management is an umbrella name for various wealth advisory services provided through SEI Investments Management Corporation, a registered investment advisor.