Protect and Transfer Wealth

Protect and Transfer Wealth

March 25, 2024

It might surprise you to hear that Estate Planning is not just for the very wealthy.  In fact, we all need to ensure that our assets are handled appropriately upon our death or in case of our incapacity. A solid estate plan can provide confidence for you and your family, and it need not be complicated.

The Four Key Documents:

  1. Will outlines how you want your assets distributed after your death. It names an executor who will manage your estate according to your wishes.
  2. Power of Attorney document grants someone the authority to make financial decisions on your behalf if you become unable to do so. There are two types:
    • Durable (takes effect immediately)
    • Springing  (takes effect only after evidence of your incapacity)
  1. Living Willspecifies your preferences for medical treatment.
  2. HealthcareProxy appoints someone to make healthcare decisions

          on your behalf. Be sure to choose these roles carefully.

Other Important Considerations:

  • Who are your beneficiaries?  These are assigned to specific account types like life insurance, annuities, or retirement accounts.
    • Individuals (family members or friends)
    • Organizations (trusts or charities)
    • Be sure to name both primary and contingent beneficiaries
  • Transfer on Death (TOD): Can be used for other account types:
    • Real Estate, Savings, Checking and Investment accounts.
    • Avoids probate and allows the transfer of assets automatically to beneficiaries.
    • There are state-specific laws on TOD to be considered. 
  • Keep beneficiary and TOD designations up to date and review them periodically
  • Trusts: Can be established for various purposes:
    • Avoiding probate
    • Minimizing estate taxes
    • Managing assets for beneficiaries

Establishing a trust allows you to control how and when your assets are distributed.  However, a trust can be complex and involves both legal and financial considerations. Basic Trust options include:

    • Revocable Trust: Created during your lifetime, this trust can be modified or revoked. These assets avoid probate and may provide continuity of asset management in case you become incapacitated.
    • Irrevocable Trust: Generally cannot be altered or revoked.  These assets are no longer considered your property and therefore may offer potential tax benefits.
    • Testamentary Trust: Created within a will and comes into effect upon your death. Assets are transferred to the trust according to the terms and conditions outlined in your will.
    • Special Needs Trust: Designed to provide financial support for individuals with disabilities without disqualifying them from receiving government benefits (e.g. Medicaid).
    • Charitable Trust: Created to manage investments to benefit specific charitable organizations or purposes.