The Alphabet Soup of Comprehensive Estate Planning
Mark R. Ensign, JD, CPA
Attorney and Counselor at Law
LT -- Living Trust
The core document in a comprehensive estate plan. Avoids costs and delays of guardianship and probate while maintaining control, ensuring privacy, and making distributions to loved ones.
DLPOA -- Durable Limited Power of Attorney
Appoints agent and limits power so assets may be only transferred into a living trust if owner incapacitated.
POW -- Pour-Over Will
Transfers into trust at death any assets owned outside of trust. Only those assets will be subject to probate process.
DPAHC -- Durable Power of Attorney for Health Care
Appoints agent, usually a loved one, to make health care decisions when one is not able to do so.
LW -- Living Will
Directs one's life not be prolonged by artificial means.
ILIT -- Irrevocable Life Insurance Trust
Excludes life insurance from estate tax and provides funds to pay estate taxes or for distribution to the family.
FLP -- Family Limited Partnership
Isolates family assets reducing exposure to lawsuits for liability claims such as for accidents or for malpractice.
CRT -- Charitable Trust
A family of tools providing current income cash flow, income and estate tax savings, charitable benefits to society, and replacement assets for family. Best for highly appreciated property.
CRAT -- Charitable Remainder Annuity Trust -- Fixed dollar amount paid to donor or donor's family. Remainder of principal passes to charities selected by donor.
CRUT -- Charitable Remainder Unitrust -- Fixed percentage of trust value paid to donor or donor's family. Remainder of principal passes to charities selected by donor.
CLT -- Charitable Lead Trust - Income paid to charities for a period. Principal passes to donor's beneficiaries.
GRIT -- Grantor Retained Interest Trusts
A family of tools offering grantor current cash flow coupled with opportunities for estate tax savings, and transfer of assets to family.
GRAT -- Grantor Retained Annuity Trust - Fixed dollar amount paid to grantor for a period; then property passes to family.
GRUT -- Grantor Retained Unitrust - Fixed percentage of trust value paid to grantor; then property passes to family.
QPRT -- Qualified Personal Residence Trust - A GRIT for transfer of personal residence allowing use by grantor for a period of years; then residence passes to family.
LLC -- Limited Liability Company
Reduces personal exposure for business liability like a corporation but taxed like a partnership.
LLP -- Limited Liability Partnership
Reduces personal exposure in a partnership for the acts of other partners for which there is no personal responsibility.
Not certified by Texas State Board of Legal Specialization