Legal Documents

1. “Just do it!” as the popular shoe company would say. Creating a well thought out estate plan can be overwhelming and like most overwhelming tasks in life, it’s easy to procrastinate. The hard truth is that the absence of a plan will put loved ones in a very burdensome reality. The basic estate planning documents include a Living Trust, Wills, Power of Attorney, and Health Care Directives. In the event of death or incapacity without these documents, the state will step in and begin a probate proceeding or a conservatorship. These proceedings are costly, time consuming, and stressful for the family.
2. Funding the trust as is important as drafting the trust document itself. A trust is ineffective if your assets (property and investment accounts) are not titled in the name of the trust. This is a common mistake made by many so it’s important to make sure all your assets are titled correctly.
3. Conduct a review of your retirement accounts and life insurance policies to make sure that your primary and contingent beneficiaries are named properly. Play out differing scenarios to make sure that you understand exactly how these assets will be treated both from a succession plan and a tax planning perspective. Doing so could save the family from additional stress and unnecessary taxes.
4. Death is not the only reason to create a plan. An unexpected or long term disability can have a bigger impact on your personal and financial affairs. Prepare for who might raise your children, who will handle your finances, and who will make health care decisions if you were to become incompetent or disabled. You can do this by having a Health Care Directive and proper Durable Power of Attorneys in place.
5. In naming your successor trustees, it is important to make sure that they are trustworthy, capable, and willing to help. For example, you should place control of your assets in the hands of a person who is financially healthy themselves and has an understanding of the roles and responsibilities of a successor trustee. If you cannot determine a competent individual successor trustee, it may make sense to name a corporate trustee to assume the role of trustee after you pass.
6. Planning ahead will help ensure that your estate tax exemption amount will be fully utilized to your advantage. Under the current estate tax law for 2015, each individual can pass on up to $5.43 million dollars of assets to their heirs, estate tax free. Amounts in excess of this can be subject to taxation of approximately 40%.
7. Tax law as well as personal circumstances change. It’s important to review your plan periodically for potential changes with a competent estate attorney or advisor that has expertise in this area.
These are just some topics to be aware of. Other topics might come up and being proactive and partnering with a good financial planner can ensure that you are well-informed and well-prepared. Apriem Advisors have financial planners on staff who can help you.
BILL PUGH, CFP®, AAMS, Wealth Manager
Apriem.com