By Jack Owen, Jr. Esquire, CPA, Estate Planning Attorney and CPA, and Craig Kirsner, MBA, President of Stuart Estate Planning Wealth Advisors
You may think that creating a will is the first and only necessary step in estate planning. It’s not. You should also consider creating a trust, appoint a power of attorney, and set up advanced directives.
Creating a will is a good idea and an important step in legacy planning. But are you utilizing all of the estate planning tools that you need to consider in conjunction with that will?
Setting up a trust is another important step recommended for those with substantial estates. In addition, powers of attorney and advanced directives can make the end-of-life process go much more smoothly for both you and your family. Here’s why:
Why will creation isn’t enough
If your estate plan consists of only a will, your estate could enter probate when you pass away. This means that the probate court will appoint an executor and oversee the distribution of assets, based on the wishes stated in the will. This process can take as long as one or two years to complete. Court fees of up to 5% of your estate could be paid from the estate. But creating both a will and a living trust can allow your estate to avoid probate all together.
Revocable versus irrevocable trusts
Living trusts can be revocable or irrevocable. Revocable trusts are those that you can alter and control while you’re alive. Once you die, the trust becomes irrevocable and set in stone. Revocable trusts don’t have expanded tax benefits or protection from creditors while you’re alive. Irrevocable trusts do offer potential tax savings and creditor protection – but you have to give up control of the assets once you have assigned them to the trust, and gift taxes may apply.
Outright distribution language
One thing to note is whether “outright distribution” language is included in either a will or revocable living trust. An outright distribution of the assets you leave to your beneficiaries, including an IRA, can expose those assets to certain losses. These opportunities for losses include if a beneficiary gets a divorce if there is a lawsuit against the beneficiary if the beneficiary dies and thus the outright distributed assets could get passed to an in-law or a grandchild when they’re too young to handle them.
The dynasty revocable trust solution, however, gives you control over where your assets go
A dynasty revocable trust is a great solution for many people who are in the legacy planning phase. If one of these trusts includes multi-generational provisions, it can protect your assets to be passed to your children and grandchildren, without worry about those exposures to losses due to divorce, lawsuits, or creditor claims.
Dynasty revocable trusts can ensure that your assets stay in your family bloodline, often for several generations. These trusts remain revocable while you’re alive, so you can make updates as needed, and then they become irrevocable at your death. This protects your assets from outside parties and ensures they are distributed exactly how, when, and to whom you intended.
Power of attorney
Another important aspect of estate planning is appointing a power of attorney. This document gives a person the right and authority to act on your behalf, should you become incapacitated. You can appoint someone you trust to make decisions in your best interests. These decisions could be anything from medical decisions while you’re in a coma or unable to process facts, or paying your bills if you’re unable to coordinate that for a time.
Advanced medical directive – Your “pull the plug” wishes
Power of attorney can apply to more than just your finances. An advanced medical directive, also known as a living will, allows you to map out your own decisions for certain medical situations that could arise. You can outline what your family should do in the event that you are being kept alive by life support, for instance. Having this in place makes these hard times a lot easier for your loved ones, as they can make sure your wishes are met during your end-of-life care when you may not be able to make your own decisions.
These are all examples of estate planning steps you should take that go far beyond simply creating a will. Without some of these documents, your assets could be left unprotected, your estate could enter a lengthy and expensive probate process, and your family could be left without answers to important medical decisions.
Stuart Estate Planning Wealth Advisors can assist you with a variety of investments and work with your attorney to help implement a proper estate plan. Our goal is to protect and grow your wealth in retirement and make sure you leave a legacy for generations to come after you pass.
To learn more about proper investment and estate planning, come to one of our upcoming dinner workshops at Ruth’s Chris or Abe & Louie’s steakhouse in Boca Raton or Fort Lauderdale. Call 1-800-807-5558 or email assist@stuartplanning.com for details or to RSVP.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Stuart Estate Planning Wealth Advisors have not affiliated companies. Stuart Estate Planning Wealth Advisors is an independent financial services firm that creates retirement strategies using a variety of investment and insurance products. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Any references to safety and security generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Stuart Estate Planning Wealth Advisors does not offer legal advice. Jack Owen, Jr., Esq., CPA is not affiliated with Stuart Estate Planning Wealth Advisors. Jack Owen, Jr. Esq. office location: 4500 PGA Blvd., Suite 200, Palm Beach Gardens, Florida 33418.