Estate planning is an essential part of an individual’s asset management plan; however, it is estimated that more that more than 55 percent of Americans do not have a will or estate plan in place. 

Kelin Murphy, an associate with Oliver Maner LLP, explains that once you have a will or estate plan a periodic review is essential.   

“It is important to review your existing estate planning documents every few years and as changes take place in your life—marriage, divorce, death of loved ones, or the birth of a child—to make sure the documents still reflect your wishes and are taking advantage of the beneficial estate planning tools.” Murphy said.   

Murphy explains that in the past ten years, both the applicable exclusion amount and generation-skipping transfer tax (GST) exemption amount have increased (in 2016, the applicable exclusion amount and GST exemption amount are $5,450,000 each). 

“Currently, the credit is indexed and increased for inflation each year,” said Murphy, who specializes in corporate law, federal tax law, estate planning and estate administration and probate. “Do not let the increased credit give you a false sense of security that you do not need to do estate planning at all. The tax aspects are a part of the broader whole, which involves making sure you take into consideration your family structure and ensuring your assets go to the people you want to have them.”

Murphy said that two concerns arise for most married couples developing or updating an estate plan. First, making sure a surviving spouse is taken care of; and second, making sure after both spouses have died that the wealth they have acquired benefits their family members.

“Many people also want to reduce their estate’s exposure to taxes, thereby leaving more assets available for their children and other descendants,” said Murphy. “With those principal thoughts in mind, formulating a plan for a married couple that utilizes the marital deduction and portability to preserve the applicable credit amount and GST exemption of each spouse is a useful estate planning tool for a person who would like to transfer assets for the lifetime benefit of his or her surviving spouse.” 

However, estate planning discussions should not only focus on married individuals. Estate planning for a single person is equally as important to ensure his or her wishes are carried out. In many instances, the consequences of not having a well-coordinated plan can create real problems, whether an individual is married or single.

Murphy advises that a person should closely examine his or her assets and if he or she owns a life insurance policy and wants to reduce his or her taxable estate, an irrevocable life insurance trust (ILIT) may be an option.

“An ILIT is an estate planning technique that can offer a person a variety of benefits, including but not limited to, allowing wealth to pass to his or her heirs outside of his or her taxable estate,” said Murphy, who earned her Juris Doctor from the Walter F. George School of Law at Mercer University and received a Master of Laws in Taxation from Georgetown University Law Center. “One of the main reasons a person establishes an ILIT is to help provide his or her heirs with flexibility in settling his or her estate.”

Murphy cautions that paying estate taxes is often a difficulty because of the amount of cash needed to pay the taxes.  

“As a result, heirs may be forced to sell real estate, stocks, or a family business to raise cash,” she said. “A key advantage of an ILIT is that if the trust is set up and administered correctly, the assets owned by the ILIT will not be considered part of a decedent’s taxable estate for inheritance/estate tax purposes.” 

An ILIT is an irrevocable trust, which means that once it is set up, the grantor cannot terminate it, make changes to it, or withdraw assets for his or her benefit. It is administered by a trustee, and premiums on the life insurance policy are often paid by the trust. 

“Usually, the grantor transfers sufficient money to pay the premiums into the trust,” Murphy explains. “These contributions by the grantor are another avenue for the grantor to slowly decrease the size of his or her estate. Then, the trustee may use such contributions to pay the premiums.” 

Murphy is a member of the State Bar of Georgia, member of the Junior League of Savannah, the Savannah Estate Planning Council, the St. David’s Welsh Society of Savannah, and is a member of the current Leadership Savannah class.