Important Estate Planning Vehicles

The most fundamental piece of any estate plan, a will is a legal document that allows you to communicate your wishes and control the distribution of your assets. There are numerous ways to prepare a will; the most common is to work with an attorney.

A will has two key benefits:

• Designed to distribute your estate as you wish upon your death
• Helps to alleviate potential discord among your beneficiaries about the bequest

Who is involved?

• Attorney
• Executor(s)
• Wealth Advisor
• Beneficiaries

Considerations:

• Be sure to review regularly and update accordingly with changes to your personal and financial situation, such as marriage or divorce, births or deaths, career changes, retirement, or inheritances
• Check to be sure that your will complies with the laws of all jurisdictions in which you reside

As a legal arrangement that allows you to transfer property to another individual(s) or entity for the benefit of yourself and/or your beneficiaries, a trust specifically designates how your assets will be held and managed—and can be designed with the objective of providing your heirs maximum wealth with minimum tax implications.

Benefits include:

• Maintaining control over how your assets are managed and distributed
• The opportunity to mitigate taxes
• The potential to avoid probate and reduce estate settlement costs
• Provides financial accountability to future beneficiaries, such as your children and grandchildren

Who is involved?

• Attorney
• The grantor (you)
• The trustees
• The beneficiaries

The beneficiaries

• Be cognizant of the fact that there are many types of trusts, and based on their structure and purpose, some can be altered (revocable), while others cannot be (irrevocable)
• Understand how taxes at both the federal and state level will impact your overall trust objectives

These legal documents allow you to designate a person to act on your behalf in the event you become incapacitated. Depending on your wishes, you may create a living will, health care proxy, power of attorney, or advanced directive, which provides instructions to the person you’ve designated to act on your behalf.

There are numerous benefits to these types of documents, including:

• Power of attorney designates an agent to make financial decisions for you, such as signing contracts, directing IRA distributions, and taking other financial actions in the event of your incapacity
• A living will is designed to make sure that your wishes are met (with regards to life support) should you experience a catastrophic medical condition
• A health care proxy names a person (“agent”) of your choosing to act on your behalf should you become unable to make medical decisions

Who is involved?

• Attorney
• The Principal (you)
• Agents (designated by you)

Considerations:

• Gain a thorough understanding of your state’s laws as they relate to advanced directives; there is substantial variance across states
• Be sure to name an agent who is best suited for the task (not always a spouse)
• Because of different state rules, it’s important to execute separate documents for each state where you frequently spend time and to name the same person as your representative in every state’s documents