Tuesday, March 24, 2015

Funding: the Next Step in Estate Planning

     When clients finish signing their estate plans, they often have a look of relief on their faces. They realize, after putting off planning for many years, they now have a plan that will make things much easier for their loved ones if something unexpected happens to them. Of course, signing the documents is not the end of the estate planning process. In order to minimize probate delays, unnecessary costs, and gain the maximum benefit from a Living Trust, clients must take the time to fund their assets to the Trust.
     Clients should retitle major assets, such as real estate and business entities, to ownership by the Trust. This allows the client to retain complete control of the asset during their lifetime and ensure that the successor Trustee can easily administer the property within the Trust, in total privacy, after death. Real estate transfers should include residences, vacation homes, vacant land, and commercial buildings. Business interests should include stock in corporations, and ownership interests in limited liability companies and partnerships.
     It is equally as important to transfer broker, bank, and privately managed investment accounts to the Trust. Again, there is no loss of control during the client’s lifetime and the assets will escape probate costs, time delays and publicity.
     For other assets, clients will need to update their beneficiary designations. For life insurance policies, the primary beneficiary of the policy should be the changed to the name of the Trust. This allows the successor Trustee to immediately access the proceeds for the beneficiaries benefit without worrying what happens if beneficiaries get large sums of money without restrictions, or if a beneficiary dies and there are no alternate beneficiaries. Depending on the terms of the trust, clients may also want to name the trust as a contingent beneficiary on their retirement accounts.
     While you are in the organizing mood, you may also want to give attention to the following:
  • Notify those you have named to make decisions under your Power of Attorney and Patient Advocate Designation, and provide them with a copy of those documents.
  • Make a list of assets, including account numbers and passwords, and keep copies of statements, deeds and business ownership documents in a specific place.
  • Consider having children over the age of 18 execute a Power of Attorney and Patient Advocate Designation so you will be able to make decisions for them should they get into an accident or suffer a debilitating illness.
  • If you are traveling and leaving minor children with grandparents or others, provide the caregivers with an Authorization for Medical Decisions, so they can give guidance to medical personnel in the event of an emergency.
     These steps can provide you with peace of mind, knowing that things are in place the event of an emergency. Remember to keeps all of these things up to date, then store them somewhere safe, presuming they will not be needed for many years.

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