Introduction

The planning profiles in the EPIC framework are designed to address the diverse needs and circumstances of clients. These profiles are based on Money Models, which categorize clients according to their financial situations and estate planning goals. Each profile guides the creation of a tailored estate plan that meets the client’s specific needs.

Estate Transfer Model

Assets owned outright do not have legal title easily transferred without probate. As such, a simple definition of estate means “assets of a deceased asset owner”.

This contrasts with assets held in a trust. Trust assets have legal title vested in the trustee. The simple estate transfer planning profile applies to the many fact patterns in which a client does not wish to protect their assets against one of the three threats to wealth, but seeks probate avoidance and a restrictions on distributions in the event of incapacity or, when distributed to the second generation, to underage beneficiaries.

Profiles within the Estate Transfer Model are:

Simple Estate Transfer

The Simple Estate Transfer profile is for clients with low net worth or single clients who do not seek to protect assets from Medicaid. These clients typically have straightforward estates without complex assets or intricate estate planning needs.

Complex Estate Transfer

The Complex Estate Transfer profile applies to clients similar to those in the Simple Estate Transfer profile but with real estate in more than one jurisdiction. This adds a layer of complexity due to varying state laws and the need for coordinated management across different locations.

Asset Protection Model Includes the Following Profiles:

Most prefer asset protection over estate transfer when properly informed. When posed to a prospective client the question “do you want to protect your spouse’s inheritance from Medicaid spend-downs, few say “no.” It is slightly more difficult to persuade a single person of the value of a similar strategy for their own assets. However, proper education usually enlightens those who react in the negative due to the perception of a plans complexity. Tax profiles are far less common unless you reside in a state with its own estate tax and a low credit amount, e.g., Washington and Oregon are notable examples. (Oregon is set to increase its estate tax credit amount in 2025.)

Spousal Protection

The Spousal Protection profile is for couples with a net worth between $500,000 and $4 million, depending on liquidity. These clients aim to protect the spouse’s inheritance from Medicaid spend-downs, liens, transfer penalties, and look-back periods. The focus is on ensuring that the surviving spouse is financially secure and that assets are safeguarded against potential future claims.

Asset Protection Tax

The Asset Protection Tax profile caters to couples or single clients with a net worth above the relevant estate tax credit amount. This profile is also suitable for cases where spouses have different heirs or where there is a need for trustee assistance for the surviving spouse through a trust. This involves splitting the estate into marital and non-marital shares, using default funding formulas such as:

• Clayton election for high trust level with fiduciary
• Funding Credit Shelter Trust balance to Marital Share as an outright gift or through a QTIP trust

Attorneys can override the profile selection and choose specific funding formulas such as pecuniary, reverse pecuniary, fractional share, reverse fractional share, QTIP first, and then Credit Shelter Trust.

Estate Transfer Asset Protection Tax Hybrid

This profile applies to scenarios that do not require a Spousal Protection Trust (SPT) with a will. Instead, it uses a living trust with a Credit Shelter Trust and possibly a QTIP trust to combine estate transfer and asset protection with tax considerations.

Asset Protection Medicaid

The Asset Protection Medicaid profile is for single clients with discretionary assets, typically at an age where they are not actively buying and selling assets. These clients usually do not have long-term care insurance and aim to protect their estate from erosion due to high long-term care costs. This profile is also relevant for surviving spouses with significant assets, even if they have an SPT in place.

Spousal Protection Tax Overlay

This profile is for married couples with a net worth over the estate tax credit amount but not sufficient to fully fund the credit of the survivor. It also seeks to protect the spouse’s inheritance from Medicaid spend-downs. The profile adds Spousal Protection Trust provisions to the Credit Shelter Trust, as both are non-marital trusts.

Family Wealth Building

The Family Wealth Building profile is designed for high-net-worth clients who aim to reduce taxes and protect wealth from all potential threats. These clients often have complex assets, including family businesses, and a vision for family wealth and shared values related to the purpose of money. Solutions for this profile include family governance plans, family partnerships, LLCs, and various trusts used in asset protection and estate transfer, collectively known as a “Wealth Bunker.”

Stand alone Profile: Family Protection Trust

Outside of the typical models, the Family Protection profile addresses the needs of family members who struggle with issues such as ADHD, bipolar disorder, autism, or addiction. These individuals may be unemployed or underemployed. The profile involves an expanded Spousal Protection Trust and asset protection trust to ensure their financial security and management.

Conclusion

LegalEdge Innovators offers a comprehensive range of planning profiles to meet the diverse needs of clients. By tailoring estate plans according to these profiles, attorneys can provide more effective and personalized solutions. Each profile addresses specific financial situations and estate planning goals, ensuring that clients receive the protection and guidance they need for their unique circumstances.