Prepare Your Estate for Your Family
Estate planning is an essential element of your overall wealth management and financial strategy. Ensuring that you have a plan in place to distribute your home, assets, and possessions both protects your family and allows them the freedom to understand and honor your wishes after you pass.
Estate Planning Defined
Estate planning is the process of anticipating and arranging for the disposal of an estate during your lifetime. It attempts to eliminate uncertainties and maximize the value of the estate by streamlining the transfer of assets to your beneficiaries, potentially reducing estate taxes and other related expenses.
In a nutshell, an estate plan encompasses the accumulation, conservation, and distribution of an estate. Done well, it will enhance and maintain the financial security of the next generation and their families and other beneficiaries.
Benefits of Estate Planning
- Trust management for your loved ones
- Clear directive on division of property
- Direct charitable donations
- Reduced administrative costs for your estate
- Reduce or eliminate estate and gift taxes
- Protect your estate from mismanagement, creditor claims or claims from those outside of the family
What Does an Estate Plan Include?
Nearly everyone has an “estate” for purposes of estate planning. Estates include personal residences, insurance, retirement accounts, personal possessions, and household goods. You may choose to simply establish a last will and testament or create a revocable trust and pour-over will.
Last Will and Testament
A last will and testament gives instructions to the court of your final wishes, including who is in charge of implementing them, how the property will be distributed, and who will care for any children under the age of 18. However, all documents filed with the probate court will be a matter public record, and the probate process tends to be time-consuming and expensive.
A revocable trust will accomplish everything that your will accomplishes but avoids the expense and time associated with the probate court process, which is a significant advantage. A revocable trust simply means that all of the assets within the trust remain in your possession while you’re alive. At any time, you may amend or even revoke your revocable trust.
Adding a pour-over will to your estate planning mix is advisable if you have a revocable trust. The pour-over will is a type of safety net to ensure that any assets which were not included in your revocable trust will “pour-over” into the trust upon your death. Essentially the document says that anything not titled to the trust, you meant to, and the probate process is then initiated to retitle the assets to the living trust upon death.
Directives and Powers of Attorney
Your estate plan should also typically include both a Financial Power of Attorney and a Medical Power of Attorney. A Financial Power of Attorney is the person you’ll designate to execute your financial wishes, including taxes, bills and other financial decisions when you can no longer do so. A Medical Power of Attorney is the person you designate to make legal medical decisions on your behalf if you’re unable to do so.
A Healthcare Directive, otherwise known as a Living Will, tells your medical team and family the extent to which you wish to receive end-of-life care in the event you’re unable to articulate your own wishes. Another important component to include is a HIPAA release, which allows your physician to discuss your medical matter with your Medical Power of Attorney.
Estate Planning and Your Financial Plan
Estate planning is a necessary part of your financial plan, and you need an estate planning team to help you establish and manage your trusts. In almost all cases, a trust will minimize your estate transfer costs and can potentially trim taxes. Depending on the size and terms of your trust, this can range from simple administration and a wind-up of your affairs or may involve longer-term on-going administration for future generations.
Either way, it’s important to protect your estate from legal attacks, potential family mismanagement, and related legal disputes. Trusts can greatly minimize these risks. Alliance Trust Company of Nevada’s experts can help you administer your estate plan in accordance with your wishes.