For Families With More Than $2 million of Assets: Bad Wills Can Cost You $1,000,000

I met with an awesome family yesterday. The couple and their two grown children drove in from about an hour and a half away. We had done their son's estate planning a couple years ago.

We had a good time and we talked about lots of things. For me, the biggest issue was helping them avoid estate tax. Their current Wills (prepared more than 20 years ago) left their assets to each other. I told them this would "lump" all of the assets into the surviving spouse's estate and could require significant estate tax at the surviving spouse's death.

The solution was to arrange their estates so that when the first spouse dies, none of the "first spouse's assets" get included in the estate of the surviving spouse, but arrange it in a way so that the surviving spouse has contol and access to the assets. There's a few different ways to do this:

1. Set things up so when the first spouse dies, that spouse's assets go in trust for the benefit of the surviving spouse and then the children. This can be done in a revocable living trust format, or it can be done through "testamentary" trusts established in their last will and "testament."
2. You can give your spouse the lifetime usufruct of your estate in your Will. This should only be done for Louisiana residents since "usufruct" is a Louisiana term, and no one outside Louisiana knows what it means (or much less - how to pronounce it!)

Have questions or comments? Bring 'em on!