To Trust, Or Not To Trust...

…that is the age-old question! In life, we learn from Shakespeare, “Love all, trust few, do wrong to none.” But when it comes to managing your assets, is a trust really a good idea? The predictable answer: It depends. While there can be many benefits to establishing a trust, a trust may not always be necessary to accomplish one’s estate planning goals.

A recent piece in Forbes highlights the most compelling reasons why some individuals choose to put their assets into a trust. Some of these reasons include avoiding probate, protecting children or loved ones, and reducing estate taxes. Two different types of living trusts, revocable and irrevocable, can be utilized to accomplish different goals.

Alternatively, there may be other ways to accomplish your estate planning goals without a living trust. For example, there are measures you can take to avoid probate without a trust such as setting up assets to transfer automatically upon your death. Assets that are held jointly with another person or that have beneficiaries or transfer/pay on death designees can be passed to loved ones outside of the probate process. Further, a testamentary trust can be written into a will to protect assets upon your death for the benefit of your children or loved ones. This type of trust would only come into existence upon your death. Additionally, Indiana and Ohio do not collect estate taxes, and the federal estate tax exemption is currently set at $11.4 million per person for 2019. As such, generally only very wealthy individuals in Indiana and Ohio will benefit from an irrevocable trust for the purpose of addressing estate tax concerns.

The decision to establish a trust can be complicated, but it should ultimately be based upon your personal estate planning goals.

Roses Are Red, Violets Are Blue, Getting Married? Here's What To Do...

If you are newly engaged or married, updating your estate plan is an important part of establishing your new life together with your spouse. Below are a few estate planning considerations for newlyweds:

  1. Beneficiaries: After getting married, you may wish to update your beneficiary designations on retirement accounts, brokerage accounts, and life insurance polices to include your new spouse.

  2. Property Titles: If you own real property or a vehicle prior to your marriage, you may choose to update your title to add your spouse as a joint titleholder.

  3. Wills: You will likely wish to account for your new spouse as a beneficiary in your will. Additionally, if you plan to have children, you can utilize your will to choose a guardian and make a plan for passing assets to your children.

  4. Powers of Attorney: Spouses typically designate each other as primary agents for purposes of making financial and medical decisions in the event of incapacitation.

Show your new spouse some love by planning for the future.

New Year Estate Tax Exemption

For 2019, the IRS has announced that the lifetime estate and gift tax exemption amount has increased to $11.4 per person, or $22.8 million for a married couple. This means that an individual may pass $11.4 million in assets without facing federal estate taxes. Married couples may still pass assets to each other upon the death of one spouse free of federal estate taxes. The surviving spouse may then elect to utilize the deceased spouse’s exemption amount (called “portability”) which would allow the surviving spouse to pass up to $22.8 million in assets free of federal estate taxes.

The annual gift exclusion amount remains at $15,000 for 2019. This means that each individual can gift up to $15,000 to an unlimited number of individual recipients without cutting into their $11.4 million individual lifetime estate and gift tax exemption allowance .

Check out this 2019 estate tax update from Forbes for more information on 2019 estate taxes.

Make A Quick List, Check It Twice

Wondering where to start as you consider creating an estate plan? Thinking through this short and sweet checklist will give you a solid foundation for your estate plan:

  • Beneficiaries: Who will get your assets when you pass away? Friends, family, charities?

  • Specific Gifts: Do you have any special items such as family heirlooms or jewelry that you would like certain individuals to receive after you pass away?

  • Trustee: Who will manage assets on behalf of your children if you pass away while they are young?

  • Executor: Who do you trust to distribute your assets as you have spelled out in your will?

  • Financial Representative (POA): Who should make decisions regarding your finances and other personal business if you become incapacitated?

  • Health Care Representative (POA): Who should make medical decisions on your behalf if you become incapacitated?

  • Living Will: If you are in a terminal state as determined by a physician and unable to make decisions on your own, would you like to receive life-prolonging care, or would you prefer to receive comfort care only?

Best wishes for a safe and happy holiday season to you and your family!

Holiday Conversation Starters

Looking for some reading material to pass the time as you travel this holiday season? Kiplinger’s comprehensive guide to estate planning provides a solid base of information for those thinking about creating or updating an estate plan. Consider discussing some key topics from Kiplinger’s guide with family and friends over the coming months:

  • Does your existing estate plan still makes sense given your present situation in life and the current climate of estate tax law?

  • Should you utilize a trust to handle asset distribution, protect your privacy, or avoid the probate process?

  • What type of information could you share with your family members regarding your estate plan to ease tension and establish expectations?

  • How should your assets be divided (equally or unequally) among your loved ones and when should those distributions be made?

  • Should you make lifetime gifts to decrease the amount of assets you hold at the time of your death and to take advantage of the annual gift tax exemption?

Safe travels, and happy planning!

Celebrating 5 Years In Business!

Five years have flown by! As always, thank you to my family, friends, and clients for your continued support in building this business. Over the past five years, I have had the opportunity to assist over 350 individuals with their estate planning needs. Meeting so many wonderful people and working together to develop custom, affordable estate plans has been an incredibly fulfilling and rewarding experience.

Even more importantly, our family has been blessed with three beautiful children over the last five years. Many of you know that the past year has been incredibly difficult for our family after the birth of our third child, our second with special needs. I will be forever grateful to my clients for your kind words, prayers, and flexibility this year as we have managed our child’s medical needs. Your compassion during this time is appreciated beyond measure. To those closest to us who stand behind us daily, your unwavering support is everything - thank you.

I Have A Will...Now What?

If you have created your will, congratulations - you are more prepared than over half of America! While a will is an essential piece of any estate plan, Kiplinger’s recently highlighted some important matters to consider after your will is in place:

  1. Review beneficiary designations on life insurance policies and financial accounts.

  2. Plan and even pay for your funeral ahead of time.

  3. Account for “digital assets.”

  4. Make sure no accounts are forgotten.

While getting your affairs in order may seem overwhelming now, addressing these items will save headaches for your loved ones in the future. A trusted financial advisor can be a valuable asset in making sure you have tied up all loose ends when it comes to your estate plan.

R-E-S-P-E-C-T, No Will Breeds Hostility

Soon after Aretha Franklin's death this August, news broke that the celebrity, worth an estimated $80 million, failed to create an estate plan prior to her death.  Franklin's attorney asserts that although the singer understood the need to create an estate plan, like many Americans, she just...never got around to it.

Under the laws of the State of Michigan, Franklin's assets would be divided equally between her four sons.  Because of Franklin's celebrity status, no estate plan means that there is a strong possibility that extended family members, friends, or other individuals will try to claim a stake in Franklin's estate.  Such contests could tie up Franklin's assets in the court system for many years to come.

So, how could Franklin and her family have benefited from an estate plan?

1. A will or trust would have eliminated questions regarding how Franklin's assets should be divided.  In addition to fending off potential claims from opportunists, by planning ahead, Franklin could have provided a clear plan for passing her wealth to her four sons, in particular her eldest son who has special needs and is represented by a legal guardian.

2. Franklin could have utilized a trust to keep her assets out of the probate court.  By eliminating probate court involvement, Franklin would have effectuated huge time and money savings for her family.

3. While a will would have provided a road map for dividing Franklin's assets, wills become public documents once they are filed with the probate court.  Trust documents, on the other hand, are not made public and would have allowed Franklin to manage her affairs privately.  Unfortunately for Franklin's family, the administration of her estate will be a very public ordeal.

Although decisions regarding what will happen to our assets after we pass away can seem daunting, planning ahead provides peace of mind for both the testator and the testator's family.  With a little planning, questions and controversy can be easily avoided.