One of the reasons planning for life after retirement is because no one knows what the future holds, when the next stock market crash will happen or how tax laws will affect our estates in the future. Are there ways to protect assets from creditors? Can you truly reduce estate taxes? Keep reading as we explore a few financial and estate planning essentials.
Financial and Estate Planning Essentials
There are many ways to better protect what you’ve worked to acquire over the course of your life. One of the most popular mechanisms is the trust. They’re flexible and offer a variety of solutions; however, it’s important to understand the specifics since any of the assets must change ownership from you to the trust itself. Trusts can be either revocable or irrevocable.
One of the more attractive advantages is the cost. Your estate planning lawyer can set up the trust in an affordable manner that provides peace of mind for you and your family.
Wondering what the trust should include? Typically (though each person and their needs are different), a trust will include a will, a living will and a health-care proxy. After that, the specifics come into play and having an experienced attorney ensures you’re not missing any important considerations or the financial advantages. The key is getting the trust established early. Were the trust’s owner to die in the process, the assets left “in limbo”, so to speak, are probated and that defeats the purpose.
Those trusts that can house the majority of your assets are sometimes referred to as a revocable living trust. These include the need for a “pour-over will” to cover any of your holdings that outside your trust if you die unexpectedly. This is simply a legal document that provides instructions for any assets not yet in the trust. It ensures those assets go to whom you intended.
Irrevocable Life Insurance Trust
The irrevocable life insurance trust doesn’t get the attention it deserves. These trusts remove your life insurance from the taxable portion of your estate. Plus it can help pay estate costs and even provide cash for loved ones for a number of reasons. It’s irrevocable, so remember that you may no longer borrow against it or change your beneficiaries’ preferences. The proceeds may then be used to pay any estate costs after you die and provide your beneficiaries with tax-free income.
Many small business owners can really make the most of these types of trusts. It allows them to leave their business to family members. Those family members may not have any interest in continuing to the company. The bills will still come due, however. The life insurance trust can provide cash payments to cover those bills and to pay operating costs. It’s an ideal solution for parents who know their children or even their grandchildren may not have the same dream of owning a company.
This is just a few of the financial and estate planning essentials that are worth your considerations. Like to learn more? Contact DeBruyckere Law Offices at (603) 894-4141 or (978) 969-0331.
- How Can I Include Philanthropy in My Estate Plan? - April 13, 2021
- Top 5 VA Benefits - April 9, 2021
- 5 Things You Should Know about Medicaid - April 1, 2021
