The final phase of financial planning is estate planning. Estate planning allows for the control of the ultimate disposition of your assets.

People often think that estate planning is for the “ultra wealthy,” which just isn’t true.  Whether you have accumulated $100,000 or $25 million, we strongly suggest having a plan in place.  The more assets one has, the more complex the strategies-driven planning becomes.  We include estate planning in most retirement plans we do. We cannot provide legal advice or draft your estate documents, but we can educate you on your options and prepare projections to facilitate meetings with a Licensed Estate Attorney.  Our goal is to reduce estate planning costs by minimizing the time spent with an Attorney.

When all is said and done, there are three main beneficiaries to transfer your assets to.  Your loved ones, charity, or the government.  Through Trust planning, our goal is to minimize what the government receives in the form of estate & income taxes while designing a plan that allows you to control who receives the assets, what form they receive the assets, and when they receive the assets.  Here are some common trusts and uses:

  • Marital or “A” trust– Designed to provide benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse
  • Bypass or “B” trust– Also known as credit shelter trust, established to bypass the surviving spouse’s estate to make full use of any federal estate tax exemption for each spouse
  • Testamentary trust– Outlined in a will and created through the will after the death, with funds subject to probate and transfer taxes; often continues to be subject to probate court supervision thereafter
  • Irrevocable life insurance trust (ILIT)- Irrevocable trust designed to exclude life insurance proceeds from the deceased’s taxable estate while providing liquidity to the estate and/or the trusts’ beneficiaries
  • Charitable lead trust– Allows certain benefits to go to a charity and the remainder to your beneficiaries
  • Charitable remainder trust– Allows you to receive an income stream for a defined period of time and stipulate that any remainder go to a charity
  • Revocable Trust– Also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor’s) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor. You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms and assets during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death. Although a revocable trust may help avoid probate, it is usually still subject to estate taxes. It also means that during your lifetime, it is treated like any other asset you own.
  • Irrevocable trust: An irrevocable trust typically transfers your assets out of your (the grantor’s) estate and potentially out of the reach of estate taxes and probate, but cannot be altered by the grantor after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust. An irrevocable trust is generally preferred over a revocable trust if your primary aim is to reduce the amount subject to estate taxes by effectively removing the trust assets from your estate. Also, since the assets have been transferred to the trust, you are relieved of the tax liability on the income generated by the trust assets (although distributions will typically have income tax consequences). It may also be protected in the event of a legal judgment against you.