What are the Important Steps in the Estate Planning Process?

Estate planning is about taking charge of your legacy and your life. Despite all good intentions, only one in three Americans has an estate plan, according to a recent article from Kiplinger, “10 Things You Should Know About Estate Planning.”

An estate plan does not prevent death or illness. However, it does protect the family from stress and grief. By creating an estate plan, you provide your loved ones with clarity about what you want to happen to your property upon your death.

Equally importantly, the estate plan explains your wishes if you have a serious medical condition and can’t make decisions or communicate yourself. A financial Power of attorney (POA) names someone to oversee your finances and do tasks like paying bills if you are alive but incapacitated. A healthcare POA names someone to make healthcare decisions on your behalf. A healthcare directive explains your wishes for medical treatment in different situations.

What happens if you don’t have an estate plan? Each state has its own laws for what to do when someone dies or if they become incapacitated. Having an estate plan means you are making those decisions yourself. The court may assign someone to make healthcare and/or financial decisions for you. However, they may not be the person you would have selected or make the decisions you would have chosen.

Beneficiary designations supersede your will. Any account with beneficiary designations will go to the person named on the document, regardless of what your will may say.

Trust funds provide control of assets during life and after death. A trust is a legal entity holding property for someone else’s benefit. The trust can be set up to control exactly how you want your money and property distributed after death.

When you die, the court reviews your will to ensure that it’s been properly prepared and gives your executor the power to perform their tasks. This is called probate and can take time. A good estate plan can take much or all your assets out of your probate estate, speeding up the process of distributing assets faster.

Estate planning includes tax planning. In 2024, the federal exemption is $13.61 million, but 17 states and the District of Columbia levy a state estate tax. Some states also have inheritance taxes. Your estate planning attorney will help you incorporate tax planning into your estate plan.

Don’t neglect your pets. You can express your wishes in an estate plan. However, a pet trust is better. It is enforceable and provides specific information about how you want the pet to be cared for and who you want to care for it.

Digital assets need to be addressed to protect assets and prevent theft. Create an inventory of your accounts, usernames, passwords and name a person who will be your digital executor.

Review your plan every three to five years with an experienced estate planning attorney.

Reference: Kiplinger (Feb. 1, 2024) “10 Things You Should Know About Estate Planning”

Do I Need a Pour-Over Will?

A living trust, also known as a revocable trust, is used in estate planning to transfer ownership of assets in trusts and accomplishes several things. It takes assets out of your probate estate, while permitting you to continue to control the assets. You can be the trustee while living and of sound mind, as explained in the article “What Is A Pour Over Will?” from Forbes. The trust names a backup or successor trustee who manages the trust assets if you become incapacitated or die. The living trust includes the names of your beneficiaries, which may be individuals or charitable organizations.

When you die, assets held in the living trust are transferred using the trust administration process. Assets held (owned) outside the trust must be addressed differently. This usually means going through probate.

If you have no will, your state’s intestacy laws will apply. These laws would distribute your assets to family members based on their relationship to you—kinship. This may not be what you wanted, especially if a family member is estranged from you. However, it won’t matter, and other family members will have to live with the court’s decision.

However, you can use a pour-over will to “pour over” any assets not in the trust at the time of your death into the trust after your passing. This ensures that the assets will be transferred through the trust administration as well.

When the living trust is established, assets must be retitled so the trust becomes the legal owner. But you might not do this with everything you own, or you may acquire assets after the trust is created and die before you can transfer them. You might simply forget some assets.

As you create a trust for the specific reason to facilitate effective management and transfer of property through the trust administration process, it makes sense to have all your property moved into that trust upon your passing.

An experienced estate planning attorney can help create the living trust and coordinate it with your will and instructions for all assets not otherwise accounted for to pass into the trust upon your death. You’ll need to work with an estate planning attorney to be sure the trust, will and other estate planning documents comply with your state’s laws.

An estate planning attorney can help you understand other options for transferring assets and provision for loved ones. The pour-over will is one of many estate planning tools available to protect your loved ones.

Reference: Forbes (Jan. 29, 2024) “What Is A Pour Over Will?”

When was Your Last Estate Plan Check-Up?

For most people, estate planning includes preparing a last will and testament, trusts and important advance directives to prepare for incapacity, including Power of Attorney and a designation for a health care surrogate. Creating a comprehensive estate or updating an estate plan is on many people’s “to-do” lists, says a recent article from Kiplinger, “Estate Plan Check-Ups: Don’t Just Set It and Forget It.” Like most items on those never-ending lists, the goal is to get it done and move on to the next task. However, unlike some duties, the estate plan needs to be reviewed regularly.

Think of taking care of your estate plan as you do your annual physical, which is necessary even if you are healthy in the future. Your estate plan may be healthy now. However, you want to be sure it stays that way by having check-ups on a regular basis. If you have not gone for your physical or had your estate plan reviewed in a while, there are two appointments you need to make for 2024—one with your physician and the other with your estate planning attorney. Here is why:

Life is all about changes, from birth to death, marriage to divorce. Each of these life events may impact your estate plan. If your will was created before you were married or had children, it needs an update. The same is true if you leave your entire estate to an adult child who has proven to be less than responsible about money or choosing good friends.

Laws impacting estate plans change often. Changes in tax laws, estate planning regulations and inheritance rules could have already made your estate plan ineffective or invalid. Regular reviews with your estate planning attorney can ensure that your will takes advantage of new opportunities presented by these changes.

If your net worth has changed over the years, for better or worse, your estate plan needs to reflect those changes. Let’s say you own two pieces of real estate—a home and a vacant piece of land. If your old estate plan leaves the house to one child and the vacant land to another, their values may have changed dramatically in the last few years.

Beneficiary designations are part of your estate plan, even if they are not in your will or advanced care directives. Any account with the ability to name a designated beneficiary should be checked whenever you update your estate plan. If you do not, you may be passing assets on to ex-spouses or excluding new family members.

By regularly updating your estate plan, you can ensure that it reflects your wishes and will be effective in protecting your loved ones.

Reference: Kiplinger (Jan. 26, 2024) “Estate Plan Check-Ups: Don’t Just Set It and Forget It”

Do Not Neglect Digital Estate Planning

You may think having a will and perhaps a trust or two is all you need for your estate plan to be complete. However, if you do not also have a “digital estate plan,” your online life, from emails to financial accounts, may live forever and leave your estate and your heirs vulnerable to identity theft, says a recent article from Consumer Affairs, “Your digital legacy could be exposed after you die.”

Do not feel guilty, since most people age 65+ are completely unaware of their digital legacies, while 75% of millennials have a digital executor in their wills.

The problem is, if your executor cannot identify and access your digital assets, they may be left online in perpetuity and could be accessed by thieves who know more about navigating the web and selling stolen assets than you or your heirs.

You could leave your digital legacy to fate. However, it would be far better to be proactive by creating a digital estate plan. This also reduces the chances of your heirs quarrelling over your intentions with digital assets, just as your will and trust do for traditional assets.

Start with an inventory. List all your online accounts, websites where photos are stored online, social media profiles and all other files. You should then document all your login credentials, passwords and security questions for each asset. You may wish to use a password manager to organize and encrypt the information.

Make sure your executor and heirs know what you want by providing clear instructions in a document like a Letter of Intent. This is not legally enforceable. However, it can convey your wishes properly. Be sure that the right person or people know where your digital assets inventory is located.

Remember, you do not want the inventory of assets in your will, since it will become part of the public record when the estate goes through probate. However, you do want it documented.

Make it legal and secure. Most states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which gives trustees the right to access and manage digital assets after the owner’s death or incapacity.

Talk with your estate planning attorney about how your state’s laws address digital assets and what actions you will need to take.

Reference: Consumer Affairs (Dec. 18, 2023) “Your digital legacy could be exposed after you die”

Should You Talk with Loved Ones about Your Estate Plan?

We think of family time as gatherings for holidays and celebrating joyful occasions. However, there are times when the business side of life needs to be addressed. The best time to share your estate plan information with the family is when you are well, mentally and physically, says the article “Financial Focus: Consider family meeting to discuss estate plans” from Vail Daily.

What should your conversation include?

What are your wishes for your estate plan? Do you hope to leave an inheritance for family members, support a family member in need, or create a legacy with a charitable organization? The family meeting is the time to clarify your thoughts with loved ones, especially if there are concerns within the family, such as a special needs member or economic disparities between siblings.

Be prepared for surprises. Your millennial children may be more concerned about you having a secure retirement than an inheritance.

If you have your estate planning documents in order, this is a time to discuss them. If you do not, make an appointment to meet with an experienced estate planning attorney to create a comprehensive plan. Your documents may include a will, a trust, financial power of attorney, health care power of attorney and end-of-life documents. Give your family members a general idea of your wishes, especially for end-of-life matters. This relieves them from having to guess what you would have wanted in times of incapacity or upon your death.

Talk about the roles you wish them to play. You will need to name an executor to administer your estate. They should be asked to take on this role before the time comes. You will also need a trustee and a successor trustee for any trusts. Choosing the right person for these roles involves acknowledging who is more capable—just because one sibling is older does not mean they are the best candidate to serve as executor.

For some families, the best setting for a family meeting is their estate planning attorney’s office. It is a neutral setting and people are less likely to fall into old behavior patterns (including spats) when they are in a professional office.

Let the family know this is not the final discussion about your estate plan. Encourage questions and, if necessary, offer to meet again. If the initial groundwork is set, you will have begun establishing a legacy for yourself and your family.

Reference: Vail Daily (Jan. 25, 2024) “Financial Focus: Consider family meeting to discuss estate plans”

The Pitfalls of Adding a Child to Your Home’s Deed

As an estate planning attorney, I’ve witnessed many parents consider adding a child to the deed of their home with good intentions. They often view this as a simple strategy to ensure that their property seamlessly passes to their children without the complexities of probate. However, this well-intentioned move can lead to numerous unexpected complications and financial burdens. This article explains why adding a child to your home’s deed might not be the optimal choice for your estate plan.

Understanding the Basics: What Does Adding a Child to a Deed Mean?

To begin, let’s clarify what it means to add a child to the deed of your home. By doing this, you are legally transferring partial ownership rights to your child. This action is commonly perceived as a method to circumvent probate. However, it is imperative to understand that it also entails relinquishing a degree of control over your asset.

Legal Implications of Co-Ownership

When you add your child to the deed, you are not just avoiding probate; you are creating a co-ownership situation. This means your child gains legal rights over the property, equal to yours. Such a shift in ownership can have significant legal ramifications, particularly if you need to make decisions about the property in the future.

Probate: Is Avoiding It Worth the Risk?

Avoiding probate is often cited as the primary reason for adding a child to a home’s deed. Probate can be a lengthy and sometimes costly process. However, it’s essential to weigh these concerns against the potential risks and challenges of joint ownership.

The Complexity of Bypassing Probate

Probate avoidance, while seemingly beneficial, does not always equate to the most advantageous approach. The process of probate also serves to clear debts and distribute assets in a legally structured manner. By bypassing this process, you might be opening the door to more complicated legal and financial issues in the future.

Gift Tax Implications: A Costly Oversight

One of the most overlooked aspects of adding a child to your deed is the gift tax implications. The IRS views this act as a gift, and if the value of the property exceeds the annual exclusion limit, it could lead to a taxable event.

Understanding Gift Tax Rules

It’s important to understand that the IRS has established specific rules regarding gifts. If the value of your property interest exceeds the gift tax exclusion limit, you might be required to file a gift tax return. This could potentially lead to a significant tax liability, an aspect often not considered in the initial decision-making process.

Loss of Control: What Happens When You’re No Longer the Sole Owner?

The loss of control over your property is a critical consideration. Once your child becomes a co-owner, they have equal say in decisions regarding the property. This change can affect your ability to sell or refinance the property and can become particularly problematic if your child encounters financial issues.

Risks of Co-Ownership

In a co-ownership scenario, if your child faces legal or financial troubles, your property could be at risk. Creditors might target your home for your child’s debts, and in the case of a child’s divorce, the property might become part of a marital settlement.

Capital Gains Tax: A Long-Term Financial Burden

A significant financial consideration is the potential capital gains tax burden for your child. When a property is inherited, it usually benefits from a step-up in basis, which can significantly reduce capital gains tax when the property is eventually sold. However, this is not the case when a child is added to a deed.

Implications of Missing Step-Up in Basis

Without the step-up in basis, if your child sells the property, they may face a substantial capital gains tax based on the difference between the selling price and the original purchase price. This tax burden can be considerably higher than if they had inherited the property.

Family Dynamics and Legal Complications

Adding a child to your deed can inadvertently lead to family disputes and legal challenges, especially if you have more than one child. This act might be perceived as favoritism or create an imbalance in the distribution of your estate, leading to potential conflicts among siblings.

Navigating Family Relationships

It’s crucial to consider the dynamic of your family and how adding one child to the deed might affect relationships between siblings. Equal distribution of assets is often a key consideration in estate planning to maintain family harmony.

Alternatives to Adding a Child to Your Home’s Deed

There are several alternatives to adding a child to your home’s deed. Creating a living trust, for instance, allows you to maintain control over your property while also ensuring a smooth transition of assets to your beneficiaries.

Benefits of a Living Trust

A living trust provides the flexibility of controlling your assets while you’re alive and ensures they are distributed according to your wishes upon your death. This approach can also offer the benefit of avoiding probate without the downsides of directly adding a child to your deed.

Seeking Professional Advice: Why It’s Crucial

Given the complexities and potential pitfalls of adding a child to your home’s deed, seeking professional legal advice is essential. An experienced estate planning attorney can help navigate these complexities and tailor a plan that aligns with your specific needs and goals.

The Role of an Estate Planning Attorney

An estate planning attorney can provide invaluable guidance in understanding the nuances of property law, tax implications and family dynamics. They can help you explore all options and devise a strategy that best protects your interests and those of your family.

While adding a child to your home’s deed might seem straightforward to manage your estate, it’s fraught with potential problems and complications. It’s vital to consider all the implications and seek professional guidance to ensure your estate plan is effective, efficient and aligned with your long-term intentions.

Key Takeaways

Gift Tax Risks: Be aware of potential gift tax implications when adding a child to your deed.
Loss of Control: Understand that you will lose some control over your property.
Capital Gains Tax Issues: Consider the long-term capital gains tax burdens for your child.
Family Dynamics: Think about the impact on family relationships and potential legal disputes.
Better Alternatives: Explore other options like setting up a living trust.
Seek Competent Guidance: Consult with an estate planning attorney for personalized advice.

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

Establishing an Endowed Scholarship: A Strategic Approach to Charitable Giving in Estate Planning

Introduction to Endowed Scholarships and Estate Planning

Endowed scholarships are powerful tools in the realm of charitable giving, often used as a part of comprehensive estate planning. An endowed scholarship is a significant philanthropic commitment that involves establishing a fund to provide scholarships to students, typically in perpetuity. It’s a donation and a long-term investment in future generations, aligning with the donor’s values and interests. Endowed scholarships can be established during a donor’s lifetime or through estate gifts, allowing individuals to create an important legacy reflecting their passion for education and student support. For a detailed overview of how endowed scholarships function within charitable giving and estate planning, see The National Association of Charitable Gift Planners.

In estate planning, establishing an endowed scholarship can offer a meaningful way to memorialize a loved one or to honor family and friends, while also providing tax benefits. It serves as a lasting testament to the donor’s commitment to education and charitable giving, ensuring that their philanthropic goals continue to be met even after they are gone.

Understanding the Endowment Process

To endow a scholarship means providing a stable funding source by creating an endowment fund. An endowment fund is typically a large sum of money that is invested. The earned income from the investments is used to fund the scholarship. The principal amount of the endowment remains intact, allowing the scholarship to be awarded yearly indefinitely, based on the income generated.

Establishing an endowed fund involves careful planning and collaboration with financial or philanthropic advisors. The donor needs to decide on the amount to endow, which should align with their financial capabilities and the objectives of the scholarship. The process also involves legal considerations, since the terms of the scholarship and the fund’s administration must be clearly defined and documented. A comprehensive guide on endowment funds can be found at The Council on Foundations.

Benefits of Establishing an Endowed Scholarship

There are numerous benefits to establishing an endowed scholarship for both the donor and the recipients. From a donor’s perspective, endowed scholarships provide a way to make a significant, lasting impact while also reaping financial rewards. They can lead to potential income tax deductions and be a part of a strategic plan for estate gifts, reducing the taxable estate.

For scholarship recipients, an endowed scholarship represents a reliable source of tuition assistance, often making the difference in their ability to pursue higher education. These scholarships can be designated according to the donor’s wishes, targeting specific fields of study, financial need, or other criteria, thus allowing donors to support areas they are passionate about.

Steps to Establish an Endowed Scholarship

Establishing an endowed scholarship begins with a clear understanding of one’s philanthropic goals and a consultation with a philanthropic advisor or estate planning attorney. Donors should consider the endowment size, the type of students they wish to support and the impact they hope to achieve.

Legal and financial planning is crucial in creating a scholarship fund. This involves drafting the terms of the scholarship, deciding on the fund’s management and ensuring that the scholarship aligns with the overall estate plan. The donor must also work with the chosen educational institution or charitable organization to set up the fund and define how the scholarship will be administered.

Determining the Criteria for Scholarship Recipients

One of the most important aspects of establishing an endowed scholarship is setting the criteria for scholarship recipients. This process allows donors to personalize their scholarship according to their values and the impact they wish to make. Criteria can include academic merit, financial need, specific areas of study, or any other factors the donor deems important.

Balancing the donor’s wishes with institutional policies is key. While the donor can designate the scholarship according to their preferences, they must also ensure that the criteria are feasible and aligned with the institution’s policies and regulations.

Naming and Memorializing with Endowed Scholarships

Endowed scholarships offer a unique opportunity to memorialize a loved one or to create a legacy in the donor’s name. Naming a scholarship can be a very meaningful way to honor family, friends, or personal causes. It ensures that the donor’s or the loved one’s name is associated with educational support and philanthropy for years to come.

Establishing a named scholarship also signifies a lasting commitment to education and charitable giving. It is a way for donors to leave a significant mark on the institution and the lives of its students, ensuring that their legacy continues in perpetuity.

Managing and Growing the Endowment

Effective management of the endowment is crucial to ensure its longevity and impact. This involves prudent investment strategies to grow the principal amount, while generating sufficient income to support the scholarship. Regular reviews and adjustments to the investment strategy are necessary to align with market conditions and the scholarship’s objectives.

Donors and institutions may also seek additional contributions to the scholarship fund. These contributions may be made by the donor, family members, or others who share the donor’s vision, thus helping to grow the fund and increase its impact over time.

Tax Implications and Estate Planning Considerations

Incorporating endowed scholarships into an estate plan can have significant tax implications. Donors can benefit from income tax deductions for their contributions to the scholarship fund. By reducing the taxable estate, endowed scholarships can also be an effective tool in estate planning, potentially lowering estate taxes.

When planning for an endowed scholarship, consulting with tax professionals and estate planning attorneys is essential to understand the specific tax benefits and how they fit into the broader estate plan. This ensures that the donor’s philanthropic goals are met in the most tax-efficient manner.

Conclusion: The Lasting Impact of Endowed Scholarships

Endowed scholarships are more than just financial aid; they reflect the donor’s values and a commitment to future generations. They offer a unique opportunity to leave an important legacy of support, ensuring that the donor’s passion for education and charitable giving continues to make a difference for many years.

Key Takeaways:

Endowed scholarships provide a lasting source of support for students and can be a crucial component of estate planning.
Establishing a scholarship involves careful planning, including setting recipient criteria and managing the endowment fund.
These scholarships offer tax benefits for donors and ensure a legacy in the field of education.

If you’re inspired to make a lasting impact through an endowed scholarship or have questions about incorporating one into your estate plan, we’re here to guide you every step of the way. Don’t miss this opportunity to create a legacy that resonates with your values and transforms the lives of future generations.

Request a consultation today with our estate planning team to discuss how you can establish an endowed scholarship that reflects your vision and achieves your philanthropic goals. Together, we can turn your aspirations into meaningful action.

How Can Older Adults Not Get Scammed?

Everyone becomes more vulnerable to scams and financial abuse as we age into our later years, reports a recent article from Kiplinger, “Seven Ways to Protect Older Adults from Financial Abuse.” Older people are swindled out of more than $3 billion every year, and more than 3.5 million people are victims of financial exploitation every year. Protecting financial well-being requires prevention, which also applies to younger adults.

Maintain a heightened awareness level. Talk with family members about the potential risks from thieves, online and in real life. Know that exploitation by family members is just as likely, sometimes more so, than by strangers.

Maintain open communication. Just like meeting with an estate planning attorney regularly to ensure legal affairs are in order, check in with trusted loved ones about their financial status regularly. Talking about money among families can be challenging, depending on the family’s history and dynamics. Nevertheless, an open and ongoing dialogue will help with early detection and prevention of financial abuse.

Arrange for a Durable Power of Attorney. The person selected as a Power of Attorney (POA) should be trustworthy and capable of managing finances in case of incapacity. Talk with your estate planning attorney about whether you need to apply certain limitations for your POA or if it should be a broad document. If you are a “solo ager,” you may want to ask your estate planning attorney to act as your POA.

Make sure your estate planning is in order. Estate planning is an essential area of protection for people of any age, especially older adults. If your will, trust, or estate planning documents have not been updated in more than four years, it’s time to make an appointment with your attorney. There are many legal options for safeguarding assets and ensuring that your wishes are followed.

Monitor accounts regularly. Reviewing monthly statements from investments, banks and other accounts is essential for protecting assets. A few simple steps can avert fraud, including freezing credit, setting stricter controls on social media and setting phones to send unknown callers to voicemail.

Signing up for financial account and credit monitoring helps detect irregularities or unauthorized transactions. Allowing a trusted loved one to monitor accounts may make sense, depending on support needs and comfort level.

Safeguard personal information. If you’re using your birthday or your pet’s name as a password, it’s time for new passwords. The digital world has increased risks, and endless scammers with highly technical skills exist. Consider using two-factor authentication where possible—you can’t get into your account until you confirm with a code sent to your phone, text, or email. It is an added step and effective in protecting accounts.

Stay Up to Date on Scams. Financial scams come and go in waves, like fashion. Some people still receive emails about having been chosen by an overseas family who needs to bring huge wealth to America. Others have been targeted by romantic scammers on dating websites. There are Medicare scams, charity scams, IRS impersonation scams, sweepstakes scams and grandparent scams. In other words, thieves try to access accounts and funds in many ways. Be vigilant!

Reference: Kiplinger (Jan. 8, 2024) “Seven Ways to Protect Older Adults from Financial Abuse”

3 Signs You Definitely Need a Trust (and Not Just a Will)

Estate planning is akin to crafting a roadmap for the future; it’s about guiding your loved ones through the maze of your final wishes with clarity and ease. At the heart of this journey lie two pivotal tools: wills and trusts. While both serve to shepherd your assets posthumously, certain situations demand the finesse of a trust over the simplicity of a will. In this piece, we’ll illuminate the scenarios in which a trust isn’t just a choice, but a necessity.

Understanding Wills vs. Trusts

A will is your voice from beyond, a document that speaks on your behalf after you’re gone. It outlines who gets what, who’s in charge and even who cares for your children. Simple and straightforward, right?

Enter the trust. This legal entity takes hold of your assets, managing and distributing them according to your precise instructions, both during your lifetime and after. Unlike a will, a trust offers a private, probate-free path tailored to complex or unique personal circumstances.

The difference? It’s like comparing a hand-drawn map to a GPS; both guide you to your destination, but one offers a path laden with potential roadblocks and public scrutiny (the will), while the other navigates you through a streamlined, private route (the trust).

You Have a Blended Family

Blended families are like tapestries – intricate, colorful and diverse. However, this beauty can result in complexity when it comes to estate planning. With children, stepchildren and multiple parents involved, a will’s one-size-fits-all approach may unravel the fabric you’ve so carefully woven.

A trust, however, can be the tailor to your tapestry. It allows you to:

Specify exact allocations: Deciding who gets what, when and how.
Protect your children’s inheritance: Ensuring that your children, not just your spouse’s, benefit from your estate.
Avoid unintended consequences: Preventing your assets from unintentionally passing to a new spouse’s children in the event of remarriage.

You Own Property in Multiple States

Owning property in different states is like having multiple anchors in diverse ports. A will, however, could make your loved ones set sail on a stormy probate sea in every state in which you own property. Each state’s probate process can be costly and time-consuming, lengthening the time before your beneficiaries can claim their inheritance.

A trust, on the other hand, unifies these disparate anchors. It allows for:

Centralized management: One entity handling all properties, irrespective of location.
Smoother transition: Bypassing multiple state probate processes.
Cost and time efficiency: Reducing legal fees and administrative delays.

You Value Privacy and Want to Avoid Probate

The probate process is like a stage where your will is the star – open for all to see. This public airing of your estate can be uncomfortable, exposing your assets and beneficiaries to outside eyes.

A trust, conversely, is the private screening of your final act. It shields your estate from the public eye and sidesteps the time-consuming, often costly, probate process. With a trust you’re not just planning; you’re protecting.

Additional Considerations

When it comes to estate planning, one size does not fit all. The decision between a will and a trust should be weighed with:

Tax implications: Understanding how each option affects your estate tax-wise.
Personalized solutions: Every estate is unique, and so should be its plan.

In the tapestry of estate planning, trusts emerge as a nuanced, flexible thread, weaving through the complexities of blended families, multi-state properties and privacy concerns. If these signs resonate with your situation, it might be time to consider a trust.

Remember, the best estate plan is one tailored to your unique story. We encourage you to seek professional estate guidance to navigate these waters.

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