10. Make sure it goes to whom you want, when you want, the way you want. Most estate plans, be they wills or trusts, leave the assets to the next generation outright (i.e., in their hands) in equal shares. However, with a little bit of thought on your part, and some guidance from an experienced estate planning attorney, you can dramatically improve the way your estate is ultimately distributed. For example, you can delay large bequests until children or grandchildren are older or give it to them in stages so that they have the chance to make some mistakes with the money without jeopardizing the whole inheritance. Similarly, you can place conditions on receipt of the money such as “only upon graduation with a bachelor’s degree” or “only to be used to purchase an annuity to provide a lifetime income for the beneficiary”. The possibilities, of course, are endless. The point here is that if you have some issue with one of your beneficiaries, talk it over with your attorney and you may be pleasantly surprised with some of the suggestions he or she may have for you.
9. Allows you to give back to the people and places that have helped you. Again, most people leave their assets to their children in equal shares. Yet time and again we see children who really don’t need the money or, unfortunately, don’t deserve it. Even when they do need and deserve it, there is a place for remembering those people and institutions who have helped make you what you are today. There is much good that is done through local community foundations if you want to show your appreciation for what your community has done for you. Think of the benefits you have garnered over your lifetime from your alma mater or the depth and richness added to your life by your place of worship. These can be some of the most satisfying gifts you will ever make.
8. Shows your family that you cared enough to plan for them. When you put time, thought and effort into planning your affairs it sends a powerful message to your loved ones. You are saying that you handled the matter with care and diligence. This will reflect itself in how the money is received, invested and spent by your heirs. If you took it seriously, it is much more likely they will handle it well themselves, including seeing to it that their affairs are properly planned.
7. Saves your heirs legal fees, taxes and time in settling your affairs. Everyone understands and wants to save fees and taxes, but what about saving time? By planning ahead with trusts instead of wills, you can abbreviate the settlement process, thus aiding the grieving process and allowing families to get on with their lives. In addition, while assets are tied up in a lengthy estate proceeding, valuable opportunities may be lost or additional expenses incurred, such as having to maintain a home. With the volatility of investments today, no one can afford to have their affairs tied up for any significant amount of time.
6. Protects your assets from being eaten up by nursing home costs. No estate plan is complete without a plan to protect it from having to “spend down” your assets if you have to go into a nursing home. Here, we may be advising you on long-term care insurance or, if you don’t qualify due to medical or economic reasons, we may be looking at alternatives such as setting up trusts to protect your assets from nursing home costs or transferring assets to other family members for safekeeping. Does your estate plan have some form of nursing home protection?
5. Allows you to continue your IRA’s for generations. New IRA rules allow you to multiply your IRA ten times or more by “stretching” them out for your children or grandchildren. When a parent dies and leaves an IRA to a child, the child may not roll over the IRA into their own, but instead must take a distribution. However, with proper advice, your son or daughter can elect under the Internal Revenue Code to take the distribution out in small increments over their lifetime. For example, if son is age 30 when parent dies, he has a 52 year remaining life expectancy. If he elects for the “stretch-out”, he takes 1/52nd next year, then 1/51st the following year, etc. If son was left $100,000, and only took the minimum distribution and earned an average of 10% a year on the investment, he would end up getting over $2,750,000 from parent’s IRA!
4. Allows you to protect the inheritance from children’s divorces, lawsuits. Did you know that the divorce rate today is about 50%? This has spawned a new term — when someone gets married these days it’s called a “starter marriage”. With middle class people leaving hundreds of thousands of dollars to their children, doesn’t it make sense to protect it from a 50% divorce rate? By leaving assets to your children in a trust (we call these Inheritance Trusts), you can not only protect it from a divorce but also from creditors in the event your son or daughter ever gets sued. This means that their money is protected (1) if they or someone they are legally responsible for ever has a major medical problem (2) if they get sued for a personal injury claim (3) if they lose their job or business and have to file for bankruptcy, etc.
3. Makes sure your estate will pass by blood instead of by marriage. Most estate plans leave the money to the children. So let’s say that you have left $250,000 to your son and $250,000 to your daughter. Now if they die (remember this is after you’re gone) who inherits from them? Your son-in-law or daughter-in-law. Can they get remarried and share your $250,000 with a complete stranger? Sure. Happens all the time. What can you do about it? By leaving your assets in an Inheritance Trust for your children, you can give them complete control over their inheritance (so you’re not “ruling from the grave”) while at the same time providing that, when they die, whatever they didn’t spend goes to your grandchildren or your other surviving children, instead of to your in-laws.
2. Guarantees you will be protected if you become disabled. About half of all people today have a period of disability before they die. Without a plan, you risk getting the state’s plan where they appoint a legal guardian for you who (1) may be someone you don’t even know (2) may change your investments (3) may be unable to protect your assets by transferring them to other family members if you have to go into a nursing home, and (4) may make it exceedingly difficult to get back control of your assets if you recover from your disability. When you set up a revocable living trust, you create a plan for disability that avoids a guardianship proceeding, puts the persons you chose in control and allows them to transfer and protect assets. Again, with a 50% disability rate, we all need to plan for it.
1. It gives you peace of mind so that you can get on with your life. When you have a well thought out and executed plan you actually feel better. You feel safe and secure that no matter what happens you have a plan to deal with it and you have your team in place to carry it out. This allows you to put those concerns out of your mind and enjoy your life. Remember, we’re worrying about it for you, so you don’t have to. We’ll not only track your plan for law changes, we’ll also invite you to our bi-annual “clients only” breakfast and, every three years, we’ll write to you asking if anything has changed. This way, you can feel assured that your plan will be up-to-date when you need it.