Estate Planning

Estate planning is generally the term used to describe the process of organizing and planning for when you become incapacitated and for the transfer of your wealth upon your death. Essentially estate planning is two-prong: 1. Naming powerholders who can make decisions about your financial and medical state during your lifetime when you cannot or chose not to manage your affairs yourself and 2. Addressing what happens to your assets when you die. Specifically, making sure that what you have goes to whom you want, in the amount and manner you desire, such as by outright bequests or the placing of assets in a trust for the benefit of the spouse, children or grandchildren.

A revocable trust can be revoked as long as those who granted the trust are of sound mind. Revocable trusts allow your assets to avoid the probate process, which is often a big financial burden on your estate. A Revocable trust provides more control over how distributions are made. An irrevocable trust cannot be revoked, so the document will continue to exist for as long as the terms of the trust dictate. This trust cannot be terminated prematurely. With careful drafting, an irrevocable trust can meet your goal (asset protection, tax planning) and allow flexibility in customization. When used properly, irrevocable trusts can be used to protect your assets from Long-Term Care.

Probably a lot more than you think. Rarely do people put pen to paper and add up all their stuff. This oversight leads to risk exposure to taxes, probate and long-term care costs you never even considered. And don’t forget to include you retirement accounts and cash death benefits from insurance too. I promise you Uncle Sam won’t forget, even if you forgot to plan.

This is an agreement with three parties: Trust-makers, the Trustees (or Trust Managers), and the Trust Beneficiaries. For example, a husband and wife may name themselves all three parties to create their trust, manage all the assets transferred to the trust, and have full use and enjoyment of all the trust assets as beneficiaries. Further “back-up” managers can step in under the terms of the trust to manage the assets should the couple become incapacitated or die. Special provisions in the trust also control the management and distribution of assets to heirs in the event of the trust-maker’s death. With proper planning, the couple also can avoid or eliminate death taxes on their estate. The Revocable Living Trust may allow them to accomplish all this outside of any court proceeding.

Rule of thumb, your plan should be reviewed at least once every five years. That being said, it really depends on where you are in life and what life events have occurred. Events like a new child, grand kids, selling/buying property, retirement, heath changes, nursing home and family passing, all probably warrant a call to your attorney to see if your docs need updates or a tune-up. Remember that your estate plan is a living thing. As life changes, so should your plan.