The Protection Plan: Protects from Losses and Saves Taxes

A Protection Plan at Borchers Trust Law is centered around a living trust instrument and includes some pretty cool provisions for your future needs.

Beyond the basic documentation that every estate plan should have, namely power of attorney, health care proxy and other health forms, and a last will and testament, and even beyond a Simple Trust agreement, the Protection Plan trust is thorough in anticipating life’s complications.

The Protection Plan fulfills all of the goals of clients that are typically either (a) in the $1 million to $5 million range of wealth, or (b) have concerns around protecting assets for themselves, their heirs, or both.

The Protection Trust may be revocable or irrevocable, depending on your needs.

We summarize the typical needs and concerns of our families in the acronym CAPS – Caring for loved ones; Anticipating incapacity; Protecting assets; and Saving time, taxes and trouble in the estate. The reason that the Protection Plan stands out as a solution is because of its – wait for it – protection against possible losses and taxes.

Tax Savings

Federal estate taxes have been around since 1913. By the 1990s every state had an estate tax and keeping track has been like watching a flock of blackbirds ever since. Some states have been more stable, like Massachusetts, which caps out at 16% and hasn’t changed from a $1 million exemption since 2006.

The federal exemption from estate tax, although up in recent years, has been much lower in the past, and there is always talk about lowering or raising it significantly. Depending on who controls the purse strings in the government, it could happen again at any time. The exemption is on the move even now, scheduled to return to $5 million, plus inflation in 2026. At 40%, we need to be aware of this hovering hawk at all times. 

Folks who have an estate of $1 million dollars or more, especially in a state like Massachusetts with a low estate tax threshold, would do well to have provision to save estate taxes at death. The Protection Plan anticipates this by:

• Maximizing the state and federal estate tax breaks with revocable trusts
• Preserving favorable income tax treatment for you and your beneficiaries on capital gains, IRA distributions, and investment income
• Allowing inheritances to skip estate taxes at the death of your children
• Using lifetime gifting to irrevocable trusts to reduce your estate for tax purposes, in some plans

Protecting Against Loss

The protections offered in the Protection Plan are in the following optional categories:

• Sheltering inheritances for beneficiaries: At the time of your passing, children will receive their inheritance sheltered from claims of creditors, divorcing spouses, government agencies that would otherwise turn off their benefits, mismanagement, and so forth.
• Remarriage of the surviving spouse: Shielding the trust from being taken by the next spouse in divorce or at death
• Powerful tools known as the Trust Protector and administrative trustee
• Irrevocable trust options:
  • You can shelter your assets against having to be spent on long term care (to possibly qualify for Medicaid to pay instead)
  • Protection of life insurance proceeds from estate taxes

Our trusts are thorough but still easy to read when taken in small bites, which is how we work. 

The Protection Plan is by far the most commonly used in our office. All of the Simple Plan elements are included in the Protection Plan. An Enhanced Plan offers even more tools to address life’s slightly more complex problems and uncertainties. 

If you’d like to learn more about our advanced plans, schedule a complimentary appointment with one of our paralegals: