Trust and Estate Planning
The planning toolkit
Candidates must understand wills, intestacy, probate, revocable living trusts, testamentary trusts, pour-over wills, durable powers of attorney, healthcare directives, and beneficiary designations. Key transfer-tax tools include the annual exclusion, lifetime gift and estate exemption, marital deduction, portability, GST exemption, ILITs, QTIP and bypass trusts, charitable trusts, special needs trusts, and dynasty trusts. Also know powers of appointment, spendthrift clauses, decanting, and TOD/POD arrangements.
Traps
Beneficiary designations generally control over a will, so stale designations are a classic error. Portability is not automatic; an estate tax return must be filed to elect it. The annual exclusion is per donee, not per donor, and gift splitting requires a return. Step-up in basis at death can make retaining low-basis assets attractive, but estate tax and income tax must be balanced. "Per stirpes" and "per capita" distribution questions reward careful reading of the instrument.
Worked example
A married couple has a $3 million estate and wants simplicity. If the first spouse dies with all assets passing outright to the survivor, the unlimited marital deduction defers estate tax, but the deceased spouse's exemption may be wasted unless portability is elected on a timely Form 706. Alternatively, a bypass trust can capture the exemption and control disposition. Compare basis step-up, creditor protection, and the surviving spouse's needs.
Rule of thumb
Review beneficiary designations and titling whenever a life event occurs; documents alone do not control if a designation says otherwise.