Key Questions to Discuss with Your Estate Planner

By Trilogy Financial
March 8, 2023
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Estate planning is an essential step to help protect the wealth that you've spent your life building. Meeting with an estate planner will help to create a comprehensive plan that will allow your assets to effectively pass to your assigned beneficiaries. Creating this initial plan can feel overwhelming, and we are here to help you prepare.

Here are five important questions you can expect to discuss with your estate advisor as you start to plan for your future.

How Would You Like Your Wealth to Pass to Your Heirs or Elsewhere?

The basis of your estate plan is where you want to direct your wealth and how you'd like that to happen. No matter how large or small your estate is, you'll need to decide how it should be distributed among children, grandchildren, other family members or favorite charity organizations. For example, this could mean leaving different parties a percentage of your total assets, or leaving one child your business and another child your vacation home.

It’s important to also think about whether you want your beneficiaries to receive their inheritance all at once or not. If you have a disabled child requiring lifelong care on your list, or someone who needs a little extra help managing their money, you may want a trust or annuity structure in place to pay out the inheritance in increments.

What Can Be Done to Prevent Costs and Conflicts for Your Heirs?

Costs for your beneficiaries are most likely to come up if your estate needs to go through probate, which is the process by which a court distributes your assets. In addition to financial costs, there are other reasons to avoid probate. Probate can be a long and exhausting process – meaning, your heirs will not be able to access your estate right away. If you have dependents who will rely on the money in your estate, this can be an especially serious concern. In addition, probate adds your estate information to the public record, which you may want to avoid. There are several strategies your financial advisor might recommend to avoid probate. These include placing assets in a trust and moving funds into joint accounts with your beneficiaries.

Conflict among heirs is another common concern, especially in families where conflict already exists. While the legal documents included in your estate should help minimize disagreements and make it more difficult for someone to contest your wishes, communication during your lifetime is important as well. Disagreements often surround specific items like jewelry or sentimental pieces rather than your financial assets. Labeling these items, writing a letter of instruction and starting to pass on these things during your lifetime can all help make your intentions clear.

How Can You Reduce Your Tax Burden?

After a lifetime of working to earn your money, you likely want to direct your wealth to your loved ones rather than the government. In 2023, only estates valued at $12.92 million (or $25.84 million for some married couples) or more may be subject to the federal estate tax. If, upon your death, the total value of your estate is less than the applicable exclusion amount, no federal estate taxes will be due.

Depending on the state you live in, your heirs or your estate might also be subject to state estate or inheritance taxes. If taxes are a concern for your estate, there are several ways to reduce your tax burden.

One simple option is to start passing money along during your lifetime. Based on the 2022 gift tax exemption limit, individuals can give up to $16,000 per recipient per year. This lets you give money directly to your children or grandchildren while reducing the value of your estate, which will reduce your tax bill. Other options include a marital trust, which allows one spouse to place assets in trust for the other spouse, and an irrevocable life insurance trust, which can pay for life insurance premiums with tax-deductible funds and then avoid estate taxes later on.

Are You Already Working with Financial Professionals?

If you're already working with an estate attorney, a financial planner or a tax professional, it's important for your estate planner to understand the strategies your existing financial team has recommended. You'll want to make sure that all of these members of your team are working together so you aren't paying for duplicated efforts or conflicting suggestions.

If you aren't already working with a financial team, your estate planner may recommend that you do so depending on the details of your estate plan. If you have complex tax concerns, you might need to talk to a tax expert. Depending on the type of trust that you wish to establish, you may need an estate attorney to set it up.

How Will Changes in Your Life Change Your Estate Plan?

Your estate plan should have the flexibility to adapt to changes in your lifestyle, family structure or life expectancy. Your initial plan will be based on your current circumstances, but you should consider potential future concerns and possible solutions.

Divorce and Remarriage

Divorce and remarriage are common life changes that can affect your estate plan. If you remarry, you may not want your new spouse to manage the inheritance of your children from the first marriage. This can create the need for a new trust to be established. In addition, if you have more children in later marriages, you will again need to update your estate plan.

Life Expectancy and Medical Issues

There are other lifestyle considerations that might change as well. For example, if based on your family history you expect to live into your 90s, you might not want to start giving away assets to avoid estate taxes. And if medical issues arise and your life expectancy changes, you will likely need to adjust your plan.

While you won't need to make any decisions based on hypotheticals, it's a good idea to discuss the possibilities.

How to Get Started?

Your estate plan is a key component of your Life Plan. To create an estate plan that addresses the above questions and any other concerns you may have, you'll need to start by finding the right estate advisor. Talk to the Trilogy Financial team to take control of your finances today while maximizing your future opportunities.

Download your free Estate Strategies eBook to learn how to protect your estate.

 

family happy after meeting with estate planner
family happy with estate planning and secure future

 

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By
Jim Young
July 21, 2022

Ok now that you’ve recovered from falling off your chair after reading the tile of this blog, let me explain.

Inflation is one of the biggest challenges in achieving, and maintaining, financial independence. The low inflation we have experienced for decades has made many of us lazy when it comes to spending.  Now is the time to put some great habits into place that will reduce your spending now and will help even more when inflation get’s back to historical norms.

Here are some tips:

  1.  The days of clipping coupons seems to be a thing of the past.  Time to resurrect this time-tested way to save money.  Now it’s done electronically.  Click here for a great article on coupon apps.
  2. Bargain shop.  The meat department is the best place to shop for deals.  Supermarkets would rather greatly reduce the price on meat than throw it away.  I’ve seen bargains at 50% off.  And not to worry, the meat is still good.
  3. Dump the name brands.  I am a big name-brand guy however that is changing.  You can save 30-50% on certain items by going with the store brand such as Kroger at Ralphs.  Just today we saved 30% on peanut butter and couldn’t tell the difference.
  4. Use those credit card miles.  If you fly Southwest use their Chase Rewards Card.  This year alone I flew two of us to Hawaii roundtrip and flew myself to NY and used my miles.  Pretty much all carriers have credit cards they use for miles.
  5. If you shop at Ralphs use their Ralph’s Reward Card.  They have a great app that shows you year to date savings.  We have saved $500 so far this year.  You also get fuel points that you can used at Shell Stations.  I’ve saved as much as $.50 per gallon!
  6. This one is real hard for me but try to walk out of restaurants with a doggie bag.  I’m the type of person that if something is real good, I’ll clean my plate (thanks mom!).  But with portion sizes so big you should have no problem making two meals out of one.  Your wallet and belly with thank you!

 

These are just a few habits to help get you through this time of high inflation that could help your plan when inflation gets back to “normal”.

By
Mark Nicolet, CFP®, MBA, ABFP™
March 6, 2018

Recent market volatility and nervousness of investors seems to make this a good time to re-evaluate our current time frames and allocations for our investment accounts. One of the most important reasons is that our time frames and risk tolerance often clarify and determine the type of investment and allocation we should consider for our money.

Let’s agree that we might feel the market is efficient over a long period of time. With this kind of long-term perspective, should this recent volatility send us into a panic when evaluating our 401k and Roth IRA; investment accounts that possibly will be utilized 10, 15, or even 25 years from now? I anticipate you can come to my same conclusion…no. Let’s take this idea one step further. I would argue that panic should not be the response, but an excitement to save more, invest more, and watch our money possibly work more efficiently for us than if it was sitting in a safe, under the mattress, or at the bank. Market volatility and “correction” is healthy for long-term investors.

Now, I just alluded to two long-term retirement accounts. What if we have a 12-month goal to renovate the kitchen? That is a different time frame. That would result in a different level of risk. In fact, oftentimes, if the assets invested are to be purposed for a capital expense within the next twelve to twenty-four months, I then recommend holding on to cash and savings. The risks and costs of investing might be too high for our level of comfort for that short of a time-frame. Then, when we know the basement is set to be finished, the birth of a child is coming, or a rental property down payment are in sight, then we may want additional funds in the bank outside of our traditional three to six months of savings, especially if the time frame is tight.

And finally, what if we have additional cash that we don’t have a specific priority in mind for, and we have a comfortable amount in our bank savings, and we don’t want to wrap additional money into a retirement account and then not have access to it until after age 59 ½? This idea, this solution, is often unknown to investors. We are taught that we need to save into retirement accounts and make sure we have three to six months of emergency savings…but that’s not all we should consider. A non-retirement investment account helps us be more efficient with our excess cash or monthly cash flow, yet these invested assets are still accessible within 2-7 business days. In the 5, 10, or even 20 years until retirement, do we anticipate having a few non-retirement priorities? I’m confident the answer is “yes” for just about everyone. Or, maybe we run into a few unexpected things, too. Let me name a few examples…anniversary trip, home remodel, broken furnace, family vacation, new car, next down payment, adoption, or caring for our parents. Until we have a time frame, let’s believe in the market, invest our money in an efficient, cost-efficient, diversified portfolio, set to our level of risk and based on our anticipated time frame.

When a priority shows up, or even a BIG emergency, if we have been saving all along, it might make us better prepared. Just like a 401k, we can establish this type of investment account, determine a monthly contribution amount, and we can save and invest on a monthly basis. This could be incredibly impactful, because if we stick to the alternative of trying to over-save into our bank savings account, what might happen? Just prior to the end of the month, we might be too tempted to “slide to transfer” our “extra” funds right back into our bank checking. By establishing this additional, more efficient savings vehicle, funds that are earmarked for a future priority, outside of two years from now, will help us to be better prepared when that priority shows up, AND, hopefully having a stronger earning potential than what is available as interest at the bank.

This last example addresses an intermediate level of planning that tends to get lost in the emergency savings/retirement planning conversation. One consideration, please be aware that since these funds may not be in tax-deferred type of accounts, there may be various kinds of taxation on the growth and trading of holdings within these accounts. You would need to discuss taxation with your tax professional. Short- and long-term capital gains taxes are to be considered. But again, one of the biggest benefits of this type of account is that these funds tend to be more readily accessible. The flexibility of these types of non-retirement investment accounts are considered to be incredibly instrumental.

To summarize, if you are funding your 401k, and you have an adequate level of savings in the bank, and still have additional cash flow that could be used for future priorities, then I encourage you to establish an individual or joint non-retirement investment account for those exact goals. But first, please schedule time to meet with a Certified Financial Planner to help craft a strategy for your financial plan. He/she will help you better understand your time frames, your priorities, which will then determine your allocation, your level of risk, your investment, and the titling of the accounts.

So, despite the market volatility, the encouragement is the same: spend less, save more, start today.

Get Started on Your Financial Life Plan Today