To help you to develop an effective estate plan -- one that not only meets all legal requirements, but also is tailored to your and your family’s unique family and financial circumstances -- your estate planning attorney needs to acquire a thorough understanding of those circumstances. Most estate planning attorneys have developed a questionnaire or fact-finder designed to gather relevant information. Still, your estate planning attorney may not have asked some of the following vital questions:

          • Citizenship of you and your spouse. You may lose substantial federal estate tax benefits and actually may incur a federal gift tax if your estate planning attorney drafts your and your spouse’s wills and trusts and advises you and your spouse to transfer assets between you without knowing that you or your spouse is not a U.S. citizen. For example, an individual may leave an unlimited about of assets to his or her U.S. citizen spouse at death without incurring a federal estate tax. However, assets left to a non-U.S. citizen spouse in excess of the estate tax exemption amount (currently $2,000,000) will be subject to the federal estate tax, unless those assets are left in a special trust known as a qualified domestic trust, or QDOT. Moreover, an individual may give an unlimited amount of assets to his or her U.S. citizen spouse during life without incurring a federal gift tax. Gifts to non-U.S. citizen spouses, however, are limited to an annual exclusion amount that is indexed for inflation. The annual exclusion amount for 2006 is $120,000. Annual gifts in excess of the annual exclusion are subject to the federal gift tax.

          • Whether you or your spouse were in a previous marriage that ended in divorce. If so, your estate planning attorney should review your divorce decree to determine whether obligations to the former spouse or children of the marriage continue after death and make appropriate provision for those obligations in your estate planning documents in order to avoid post-mortem litigation that could be costly, time-consuming, and emotionally draining for your family.

          • Whether you or your spouse have any deceased children, children of a former marriage or other relationship, or adopted children. If you are leaving assets to a class of beneficiaries such as “children” or “descendants,” your estate planning attorney must properly define those terms in your estate planning documents to ensure that your assets pass to those you intended to include in the class.

          • Whether any of your children have special needs. Your estate plan could include provisions that will avoid jeopardizing any public assistance that child is receiving or might receive in the future. More importantly, your estate plan could provide for a support network for that child following your death.

          • Existence of life insurance and the total amount of death benefits. Insurance that you own at the time of your death is part of your estate for federal estate tax purposes. And the amount included in your estate is the death benefit, not just the cash value. Therefore, it is important to inform your estate planning attorney of all life insurance policies -- including any term policies -- and the amount of death benefits. Your attorney may then recommend and help you implement strategies that will minimize federal estate taxes.

          • Whether any of your children are having creditor or marital problems. If so, your estate planning attorney should be able to structure that child’s inheritance in a manner that will protect the inheritance from a lawsuit or divorce.

          • Existence of other trusts of which you or your spouse are beneficiary or trustee. If you are a beneficiary or trustee of an existing trust (established by a parent, for example), then the trust assets may be includible in your estate for federal estate tax purposes. Or, as beneficiary, you may have certain powers that would allow you to decide how the trust assets will pass at your death or to extend the estate tax benefits of the trust. For all these reasons, your estate planning attorney should review the trust instrument to help you plan for and possibly avoid adverse estate tax consequences and to make the most of potential planning opportunities.

          • Whether you and your spouse own any assets as community property. If you and your spouse lived in a community property state (such as California or Texas) during your marriage, you may own some of your assets as community property. There are some unique income tax benefits associated with community property. Your estate planning attorney should be aware of those assets to ensure that those benefits are realized and to ensure that estate planning recommendations do not result in the loss of those benefits.

          • Prior substantial gifts made by you or your spouse. Your and your spouse’s past gift-giving history may affect the tax planning aspects of your estate plan.

          • State of your and your spouse’s health and family health history. Again, your and your spouse’s health, along with the history of each of your family’s health, such as unusual longevity, may impact the kind of tax planning your estate planning attorney may recommend.