Reasons to consider estate planning

Reasons to consider estate planning


The general purpose and use of family revocable trusts are to help an individual avoid the costs associated with the probate process, reduce and in many cases eliminate federal and state estate taxes, and ensure the proper disposition and control of their assets to their family members following their death.   What are some other major reasons to do estate planning? 


  • To Protect Your Assets from the Cost of Long Term Care: As individuals age they begin to become concerned about the potential costs associated with long term care. Their focus may shift to discovering strategies that will protect their assets from both general creditors and the costs associated with long term care. These assets often consist of their home, vacation home, rental property and/or liquid investments including life insurance and IRAs.  However, many individuals are generally reluctant to transfer such assets directly to their children or other family members for fear of relinquishing total control over them. Often, this fear results in procrastination or inaction, thereby leaving the individuals’ assets at risk for the costs of nursing home care and potentially subject to estate taxes. Instead, an individual may consider transferring such assets to the irrevocable income only trust which has a 5-year look back period.
  • Ensure Your Assets Go Where and How You Want Them Distributed: While individuals still do need wills they are not the most important document in their estate plan.  Remember, the planning objectives are to avoid probate, reduce or, if possible, eliminate estate taxes and protect assets from the cost of nursing home care.  A will simply does not accomplish any of these goals because the will is the only estate planning document that gets filed with the probate court.   
  • To Help With Financial Issues in the Event of Your Incapacity: Finally, be sure to keep the probate court away from your business affairs by designating a friend or relative as your attorney-in-fact to act on your behalf should you become disabled.  This is known as a durable power of attorney.  Essentially, this document allows another person to make financial decisions on your behalf, including, but not limited to, accessing your bank or investment accounts, IRA accounts, safety deposit boxes, and signing your name to pay bills or transfer and convey real estate. Without one of these documents you would have to get a guardianship and or conservatorship in place for your family member and then basically ask the court for permission to do things for that person.

Securities offered through Securities America Inc., Member FINRA/SIPC and advisory services offered through Securities America Advisors, Inc. Armstrong Advisory Group, Cushing & Dolan and The Securities America Companies are unaffiliated.  Representatives of Securities America Inc. do not provide legal or tax advice.  The scenarios provided are for illustrative purposes only and not intended to represent client experiences of Armstrong Advisory Group or the Securities America companies.  Please consult with a local attorney or tax advisor who is familiar with the particular laws of your state. August 2012