In the News The Wall Street Journal

Mimic the Rich: How to Minimize Taxes and Control Your Estate Without Trusts

Wealthy Americans often use trusts to slash estate taxes, avoid probate, and control how money is divvied up. But, for the average American, you may want to consider some cut-rate alternatives.

You can mimic the estate planning of the rich without incurring the costs of setting up a trust. First, limit spending by creating a plan for the estate to buy an immediate annuity which mimicks the monthly payments of a "spendthrift" trust. Second, give life. If you die owning life insurance, the proceeds may be subject to estate taxes. But according to Kirkland partner David Handler, you could arrange for the policy to be owned by another family member, similar to a life-insurance trust.  Lastly, skip probate. To avoid probate, the wealthy often set up living trusts. Instead of creating a costly trust, the average American could bypass probate by ensuring assets are "titled" so they go directly to their heirs by naming the correct beneficiaries on retirement and life insurance accounts, and setting up "transfer-on-death" or "payable-on-death" accounts.

This article appeared in its entirety in The Wall Street Journal on September 22, 2004.