You may assume that the will/trust question is an either or situation. There is some truth to this, because you have to use one of them as your primary asset transfer vehicle. That being said, there are a couple of reasons why you still need a will if you have a living trust. Before we explain them, we will look at some of the benefits that living trusts provide. Consolidation of Assets and Incapacity Planning When you have a living trust, you make the trust the owner of the property that … [Read more...] about Have a Living Trust? You Still Need a Will
Holidays can often put you in a reflective mood, and Thanksgiving is a special event that revolves around gratitude. When you sit back and think about the good things that have happened in your life, you can probably pinpoint people that helped you out along the way. Hold that thought for a moment and consider these statistics. According to a 2020 survey, 68 percent of American adults are going through life without any estate planning documents. You would expect younger adults to put it on … [Read more...] about Show Your Appreciation This Thanksgiving
In our previous post, we shared three reasons why people use trusts instead of wills, and we are going to look at three other scenarios here to conclude the series. Nursing Home Asset Protection A significant percentage of seniors require nursing home care at some point in time. Medicare does not pay for the custodial care that these facilities provide, and they are very expensive. In our service areas, you can expect to pay $80,000 or more for a year in a nursing home, and costs have been … [Read more...] about Why Do People Use Trusts (Part 2)
We are going to explain some of the reasons why people use trusts in this post. Since there are so many of them, this is part one of a two-part series. Spendthrift Protections Many people want to protect the inheritances that they are leaving to loved ones who are inexperienced or not very good with money. This can be done through the use of a revocable living trust with a spendthrift provision. You would act as the trustee during your lifetime so you would retain total control of the … [Read more...] about Why Do People Use Trusts (Part 1)?
When you leave inheritances to your loved ones, you are essentially giving final gifts. A college education may be the greatest gift of all, and you can use a 529 college savings plan to pave the way. We will explain the details here through a question and answer format. What is the basic structure of a 529 plan? A 529 plan has a structure that is similar to a Roth individual retirement account. You make contributions into the account after taxes have been paid on the income. The interest … [Read more...] about Answers to Questions About 529 College Savings Plans
The living trust is an planning tool that is more effective than a simple will. We will share some of the advantages here, and we will also look at the way living trusts are taxed. Flexibility and Efficient Estate Administration When you have a revocable living trust, you can be the trustee while you are alive and well so you would retain complete control of the assets. For example, if you transfer your home into the trust, nothing would change. You would still live in the home as usual and … [Read more...] about Do I Report Living Trust Income to the IRS?
A lot of people procrastinate before they put an estate plan in place, and once they finally take action, they breathe a sigh of relief. The documents are tucked away somewhere for safekeeping, and they feel as though the responsibility has been fulfilled. It's certainly a good feeling to have an estate plan completed and in place. However, estate planning should be looked at as an ongoing process. There are various life situations that can call for an estate plan review, we will provide an … [Read more...] about Has Your Estate Plan Been Reviewed?
Before we look at the step-up in basis and a potential change that looms over the horizon, we should take a look at the broader tax picture. Most of the things that you need to know about how taxes can influence inheritances are surprisingly positive. An inheritance is not looked upon as taxable income by the IRS or state tax authorities, and this applies to insurance policy proceeds and direct bequests. If you bequeath an individual retirement account to a beneficiary, the distributions … [Read more...] about Inheritance Planning and the Step-Up in Basis
A lot of people are under the impression that a simple will is the right estate planning document for just about everyone. They think that trusts are very complicated legal devices that are only used by multimillionaires that have to pay estate taxes. This is simply not true. Yes, there are trusts that are utilized by high net worth individuals, but there are reasons why "ordinary people" should use trusts, and we will look at a few of them here. Providing for People With Disabilities If … [Read more...] about Why Would You Need a Trust?
When researchers delve into the subject, they find that most Americans do not have estate plans in place. A lot of these people know that planning is important, and in fact, this has been measured by surveys. One reason why they stay frozen in inaction is because they do not know where to begin. With this in mind, we will provide a simple step-by-step approach that you can take to initiate the inheritance planning process. Take Stock of Your Assets The first order of business will be to … [Read more...] about A Step-By-Step Approach to Inheritance Planning