Estate planning is about more than deciding who receives your assets. It can help document your wishes, identify who may act on your behalf and create instructions for managing your financial affairs.
But is your estate plan current—and are your accounts coordinated with it?
What does an estate plan include?
Depending on your circumstances, an estate plan may include:
o A will
o Financial and health care powers of attorney
o Beneficiary designations
o Health care directives
o One or more trusts
An estate attorney should prepare and review your legal documents. A financial advisor can work with your attorney and tax professional to help coordinate your accounts and broader financial strategy.
What is a living trust?
A living trust is created during your lifetime. A revocable living trust generally allows you to maintain control of the trust’s assets and update or revoke the trust while you are living.
When properly created and funded, a living trust may:
o Provide instructions for managing assets
o Allow a successor trustee to act if you become incapacitated
o Help certain assets avoid probate
o Provide privacy when assets are distributed
o Establish guidelines for beneficiaries
Creating the trust document is not enough. Assets may need to be retitled in the trust’s name for the trust provisions to apply.
What is an irrevocable trust?
An irrevocable trust generally cannot be easily changed after it is created and funded. The person creating the trust typically gives up some ownership or control of the transferred assets.
Depending on its structure, an irrevocable trust may be used to:
o Transfer assets to beneficiaries
o Support charitable giving
o Own a life insurance policy
o Provide for a family member with special needs
o Address estate tax or legacy-planning goals
Because these trusts can have significant legal and tax consequences, they should be considered with an estate attorney and tax professional.
Living trust vs. irrevocable trust
A revocable living trust generally offers more flexibility and control. An irrevocable trust generally offers less flexibility but may be used for more specialized estate, tax or asset-transfer objectives.
The appropriate trust depends on your assets, family circumstances, goals and willingness to give up control.
Is your estate plan up to date?
Consider reviewing your plan after:
o Marriage, divorce or remarriage
o The birth or adoption of a child
o The death of a beneficiary or trustee
o A move to another state
o A major change in assets
o The purchase or sale of a business
o Changes in tax or estate laws
You should also review beneficiary designations, account ownership and whether assets intended for a trust have been properly transferred.
Estate-readiness checklist
Ask yourself:
o Is my will current?
o Have I named financial and health care decision-makers?
o Are my beneficiaries up to date?
o Has my trust been properly funded?
o Are my executor and trustee still appropriate?
o Do the right people know where my documents are stored?
The Executive Wealth Group can work with you and your legal and tax professionals to help review how your financial accounts align with your estate planning goals.
Contact The Executive Wealth Group to schedule a complimentary initial consultation.
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