If a person is seriously ill and has a shortened life expectancy, is it too late to implement beneficial estate planning arrangements?
A. A shortened life expectancy, perhaps due to a serious illness, will limit a person’s ability to employ certain planning strategies. If this eventuality occurs, a number of options should be considered. One option is converting bequests under a last will and testament into gifts. Doing so can reduce both administrative costs and estate taxes by virtue of the availability of the annual donee exclusion of $12,000 per donee per year. In addition, the donor should consider making direct payments of tuition and medical expenses for the donor’s beneficiaries, and it may be possible to pre-pay some of such expenses. Gifts of partial interests in a business or other property may be valued at a discount, which may offer some gift tax and potential estate tax advantages. A private annuity should also be considered. If it is structured properly, a private annuity would exclude the annuity property from the transferor’s estate without incurring a gift or generation-skipping transfer tax. It shou
