Estate Planning – Getting Your Affairs in Order
1. Last Wills and Testaments (Wills) -
a. Cornerstone document for tax planning and selection of beneficiaries -
b. Augmented with powers of attorney and directives to physicians –
c. Can use Wills and Trusts in tandem to achieve multigenerational transfers –
d. Simple Wills are adequate for most estates.
2. Trusts -
a. Two types –
(1) Inter vivos are set up during a person’s life.
(a) Revocable (Living) can be changed.
(i) Limited tax savings –
(ii) Assets must be retitled.
(iii) Safety requires a pour-over Will.
(b) Irrevocable rarely can be changed.
(i) Good tax savings available –
(ii) Need recanting to change -
(2) Testamentary are set out in a decedent’s Will.
b. All involve a grantor (settlor), trustee(s), and beneficiary(ies).
c. Income and estate tax implications -
3. Retirement planning other than Wills and Trusts -
a. IRAs, 401(k)s, and 403(b)s -
b. Life insurance -
c. Annuities –
d. Social Security benefits –
e. Brokerage accounts –
f. Jointly owned property
4. What happens with little or no estate planning
a. State law makes a Will for you.
b. Large estates forfeit taxes to the IRS
c. You cannot purposely shape your legacy.
d. Avoiding family disputes –
e. Digital assets jeopardized.
5. Helping Children and Grandchildren -
a. 529 plans -
b. As trust beneficiaries -
c. Provide guardians of the person and the estate -