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Home / Estate Planning / Expecting the Unexpected

Expecting the Unexpected

June 7, 2012 by Sinclair Prosser Gasior

Has your life turned out exactly as you expected? Most of us would answer this question with a resounding “No!” For better or for worse, plans change, surprises arise, and we adapt. Maybe you chose a career that is completely different from the one you envisioned for yourself back in college. Perhaps your children chose very different paths in life than you would have picked for them.

Flexibility is essential in dealing with life’s curveballs, and it is also one of the keys to an effective estate plan. It is impossible to know what your family’s circumstances will be in the months and years following your death. This makes it difficult to make an estate plan that sets in stone your long-term wishes for your loved ones. When you build flexibility into your estate plan, you can empower your spouse or children to stand in your place and make decisions based on your family’s changed circumstances.

One way to build flexibility into your estate plan is to establish a Trust that includes a power of appointment. With a power of appointment, the ultimate disposition of assets in the Trust can be controlled by the beneficiary at the beneficiary’s death.

There are two different types of powers of appointment. A general power of appointment allows the power holder to appoint the Trust assets to anyone, including him or herself. This type of power carries with it adverse tax consequences. For example, you could give your spouse a general power of appointment, and she could use the power to redistribute Trust assets among her creditors and your children upon her death. However, these assets would be taxed in her estate, as if she owned them outright.

A limited power of appointment is more restrictive but much more useful. It cannot be used in favor of the power holder, his or her creditors, or the creditors of his or her estate. Unlike a general power of appointment, a limited power of appointment results in no adverse tax consequences for the power holder. For example, you could give your son a limited power of appointment, and he could use the power to allocate Trust assets among his children at his death.

The true benefit of powers of appointment lies in long-term estate planning flexibility. Since none of us have a crystal ball, there is just no way to know what the future holds for our families. For example, your estate plan might leave each of your two children an equal inheritance. As they graduate from college and enter the workforce, one might choose a career that is financially rewarding, while the other might choose a lower paying job with a focus on public service. With a power of appointment over your Trust, your spouse would have the flexibility to adjust your estate plan to provide more assets to the child who earns less.

A qualified estate planning attorney can help you build flexibility into your estate plan so that it meets the changing needs of your loved ones long after you are gone.

About Our Law Firm

Sinclair Prosser Gasior is devoted to estate planning. We are members of the American Academy of Estate Planning Attorneys and offer guidance and advice to our clients in every area of estate planning. We offer comprehensive and personalized estate planning consultations. For more information or attend an upcoming seminar, please contact us at (410) 573-4818 or (301) 970-8080 or visit us online at www.sinclairprosserlaw.com.

About the American Academy of Estate Planning Attorneys

This article is written by the American Academy of Estate Planning Attorneys. The Academy regularly publishes articles on various estate planning topics as a free resource to consumers. These articles are intended as an overview of basic estate planning topics and issues, and not legal advice. We recommend that you consult with a qualified estate planning attorney to review your goals.

The Academy is a national organization dedicated to promoting excellence in estate planning by providing its exclusive membership of attorneys with up-to-date research on estate and tax planning, educational materials, and other important resources to empower them to provide superior estate planning services to families in their communities. The Academy expects members to have at least 36 hours of legal education each year specifically in estate, tax, probate and/or elder law subjects. Since 1993, the Academy has been a highly-regarded and sought-after resource for attorneys and consumers alike, and has been recognized by Consumer Reports, Suze Orman in her book, 9 Steps to Financial Freedom and numerous times by Money Magazine.

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Sinclair Prosser Gasior
Sinclair Prosser Gasior
Our firm is dedicated to providing you with quality estate planning resources, so you can become familiar with all of the existing options. When you visit or call our office, we want you to feel comfortable discussing such an important issue concerning both you and your family. We want to arm you with the information you need to make an informed decision about your family’s future.
Sinclair Prosser Gasior
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We initiated estate planning following a presentation by Sinclair Prosser Attorney Jon Gasior. We were so impressed, we contracted with them to complete our estate planning. Subsequently, we assembled information on our assets and Sinclair Prosser Gasior did the rest. Correspondence was communicated to our financial institutions and the estate was established. We were very pleased with the courteous manner of the Sinclair Prosser Gasior staff. However, it was their professionalism that made us satisfied we chose this firm to handle our estate. We have nothing but praise for Sinclair Prosser Gasior .

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