Trusts, Wills & Estate Planning:
A Guide for CPAs

Wills

Trusts

A document that outlines one's wishes regarding the distribution of assets and the care of any minor children after death.

Used to distribute an estate: before, at, or for a set period after death. It is a legal arrangement that gives control of assets to a trustee for management and distribution to beneficiaries according to one's wishes.

IMPORTANT FEATURES

IMPORTANT FEATURES

Subject to probate:
The court-supervised process of administering your estate and transferring your property at death pursuant to the terms of your will.

Must be court-validated

Takes effect after death

Provides less privacy: Is part of public record

Provide a one-time, lump-sum distribution of assets to heirs

Avoids probate

Does not require court validation

Can take effect after death or while alive

Provides more privacy: Does not become a public record

Faster distribution of initial assets

May be a more appropriate strategy for larger estates

Various types specific to individual needs

May have tax advantages over a will

Revocable Living Trusts
"Living Trust"

Spousal Lifetime
Access Trust (SLAT)

Irrevocable Life
Insurance Trust (ILIT)

A legal entity created by a grantor during their lifetime.

An irrevocable trust created by one spouse for the benefit of the other spouse and potentially descendants.

An irrevocable life insurance trust is a legal arrangement that transfers a life insurance policy into a trust to help minimize the tax burden to heirs. This type of trust provides estate tax relief, asset protection, and control over how the proceeds are distributed at death.

KEY FEATURES

KEY FEATURES

KEY FEATURES

• The grantor can adjust, alter, or terminate the trust anytime. The assets held in this trust bypass probate, saving the beneficiaries time and money.
• Creditor Protection Advantages: The trust creator (settlor) the ability to create trusts for beneficiaries rather than make lifetime transfers.

• Allows the donor spouse to utilize their lifetime exemption amount.
• Preserves assets from creditors. Since it is irrevocable, the trust's assets are typically not considered part of the donor spouse's property and are generally not subject to claims by creditors of the spouse or descendant beneficiaries.
• The beneficiary spouse maintains direct access and the donor spouse maintains some indirect access to the gifted assets.

• Although the insured grantor surrenders ownership and control over the policy, the trustee maintains the policy and ensures premiums are paid for the benefit of the grantor's spouse and/or descendants.

TAX ADVANTAGES

TAX ADVANTAGES

TAX ADVANTAGES

Allows the settlor (trust creator) to efficiently utilize any remaining estate tax exemption at death.

Reduces the potential estate tax liability upon death.

The ILIT owns the insurance policy and is its beneficiary, so upon the grantor's death, it allows an individual to exclude life insurance proceeds from being considered part of the taxable estate, helping beneficiaries avoid hefty estate taxes and creating a pool of beneficial assets for use by the beneficiaries long-term.