Estate Planning Consultants: How to Choose an Estate Planning Consultant

Estate planning and financial planning require different skills. For estate planning, choose a consultant who specializes in minimizing inheritance tax and securing your estate for your desired beneficiaries. Even if you already have an accountant or financial planner managing your portfolio, you still need expert estate planning advice to protect your assets in the event of your death. An estate planning consultant can help you to draw up a will or living trust to accomplish these goals.

First, check credentials; make sure your consultant is appropriately certified or accredited. Also check with the BBB and the state bar association for a clean record.

A consultant who charges a fixed ("package") fee will usually cost less than one who charges an hourly rate. The consultant should take time to understand your estate before proposing an estate plan. Someone who starts out by proposing a plan is trying to sell you on the plan, not trying to protect your estate.

Can I Avoid Inheritance Tax? The inheritance tax exemption is currently $1.5 million. Any amount over this is taxed at a very high rate (as high as 48 percent in 2004). Be wary of extravagant promises. If your total assets are significantly over the estate tax exemption, a consultant who says that you can avoid all inheritance tax may be promising more than anyone can deliver. Ask your consultant to back these promises up with court rulings and specific cases where the proposed strategy has protected an actual client's assets from inheritance tax.

Should I Use a Will or a Trust? A will is generally cheaper and easier to prepare, and sufficient for many people's needs. A trust provides greater opportunities for minimizing inheritance tax if you have a large estate, and keeps your assets out of probate. Probate is the process by which the government validates your will and distributes your assets to your heirs. During the probate process, which can last as long as several years, your assets may not be available to your beneficiaries. A trust will make your estate immediately available to your loved ones, avoiding probate entirely for those assets owned by the trust.

What is a Living Trust? A living trust is a legal entity that holds title to some or all of your assets while you are still alive. A trust does more than circumvent probate for those assets it holds. It also provides for the management of your assets should you become incapable of doing so yourself. The trust can be written so that your trustee automatically takes charge of your affairs if you are incapacitated.

What is an A/B Trust? A marital deduction and bypass trust (commonly referred to as an "A/B trust") gives married couples the full benefit of each spouse's estate tax exemption. Charitable remainder trusts let you donate to a charity, while still benefiting from your assets while you live.

Bring in a full list of your assets and liabilities, your beneficiaries, and any trustees or executors to whom you want to entrust your estate. This will enable your estate planning consultant to quickly evaluate and understand your estate, and help you choose and write the best will or trust for your situation. A properly designed will or trust can protect your assets from probate after your death and ensure that they remain under the control of your intended beneficiaries.