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common way to transfer assets to your heirs is also the messiest: to have a
will that is so out of date that it doesn’t relate to your property or estate,
to have your records scattered all over the place, to have social media,
banking and email accounts whose passwords only you can find—and basically to
leave a big mess for others to clean up.
a better way?
a group of estate planning experts were asked for their advice on a better
process to handle the transfer of assets at your death, and to articulate
common mistakes.The list of mistakes
included the following:
Not regularly reviewing documents.What
might have been a solid plan 15 or 20 years ago may not relate to your estate
today. The experts recommended a full
review every three to five years, to ensure that trustees, executors,
guardians, beneficiaries and healthcare agents are all up-to-date.You might also consider creating a master
document which lists all your social media and online accounts and passwords,
so that your heirs can access them and close them down.
Using a will instead of a revocable trust.This
relates mostly to people who want to protect their privacy.When assets pass to heirs via a will, the
transfer creates a record that anybody can access and read.A revocable trust can be titled in your name,
and you can control the assets as you would with outright ownership, but the
assets simply pass to your designated successor upon death.
Failing to fund the revocable trust.You’ve
set up the trust, but now you and your team of professionals have to transfer
title to your properties out of your name and into the trust, with you as the
trustee.If you forget to do this, then
the entire purpose of the trust is wasted.
Having assets titled in a way that conflicts
with the will or trust.You should always pay close attention to the
beneficiary designations, because they—not your will—determine who will receive
your IRA assets.Meanwhile, assets (like
a home) owned in joint tenancy with rights of survivorship will pass directly
to the surviving joint tenant, no matter what the will or trust happens to say.
Not using the annual gift exemption.People
can gift $14,000 a year tax-free to heirs without affecting the value of their
$5.49 million lifetime gift exemption.That means a husband and wife with four children could theoretically
gift the kids $112,000 a year tax-free.That can reduce the size of a large estate potentially below the gift
exemption threshold, and in states where there is an estate tax, it can help
there as well.
Not taking action because of the possibility of
estate tax repeal.Yes, the Republican leadership in Congress includes,
on its wish list, the total repeal of those estate taxes.But what if there’s no action, or a
compromise scuttles the estate tax provisions at the last minute?Federal wealth transfer taxes have been
enacted and repealed three times in U.S. history, so there’s no reason to
imagine that even if there is a repeal, the repeal will last forever.Meanwhile, dynastic trusts and other estate
planning tactics provide tangible benefits even without the tax savings,
including protecting assets from lawsuits and claims.
Leaving too much, too soon, to younger heirs.Nothing
can harm emerging adult values quite like realizing, as they start their
productive careers, that they actually never need to work a day in their
lives.The alternative?Create a trust controlled by a trusted family
member or a corporate trust company until the beneficiaries reach a more mature
stage of their lives, perhaps 30-35 years old. Also, some prefer to keep the assets in trust forever for asset protection purposes and the beneficiary becoming trustee and beneficiary of the trust at a mature age.
To Your Prosperity,
Kevin Kroskey, CFP®, MBA Adapted with permission from BobVeres.com
The Affordable Care Act -- aka Obamacare -- has become an important program for many retirees who need health insurance to bridge the gap from when employer coverage exhausts until eligible for Medicare at age 65. For those utilizing these plans and especially those that use Medical Mutual of Ohio for their insurance, it's time to review your options during the open enrollment season. As reported earlier this year, in partnership with New York City-based Oscar Health , Cleveland Clinic announced it is making its first entrance into the health insurance market with a product bearing its name. The co-branded health insurance plan will be available in Cuyahoga, Summit, Lorain, Medina and Lake with coverage beginning Jan. 1, 2018. The Clinic also will not be participating in Medical Mutual of Ohio's (MMO) -- a large insurer of northeast Ohioans and headquartered in Cleveland -- individual ACA products in 2018, as Crain's Cleveland Business first reported. MMO switched to