This Halloween Season, Explore The Variety of Estate Planning Costumes that Are Styled Particularly to Fit Your Assets!
It’s that time of year where the shelves are stocked with a Wild variety of costumes – everything from monsters and zombies, to an assortment of forest creatures and Disney princesses. The only question now: which one fits just right? Similarly, to put together a proper estate plan, you must beg the same question. In determining what estate planning strategies fit your needs, consider the following “costumes:”
The Digital Robot: Whether you are going for Star Wars’ C-3PO or a more modern Transformer, your entire outfit is all about protecting your digital assets. These digital assets include bank accounts, email accounts, digital documents, pictures, items saved on your cellular phone, blogs, Facebook, Instagram, etc. While many may advise you to simply incorporate your digital asset wishes into your will, doing so can be problematic when it comes to privacy. When a will is admitted to probate, its contents become public record. Thus, any private digital asset information you place in your will is exposed to the public through probate. As an alternative, said information can be placed in a separate document that is referenced in the will; or better yet, placed into a trust. This way, your social media identity remains private, and you can receive all of the same benefits mentioned above. Furthermore, don’t forget to consider the privacy policies and terms regarding deceased users that are agreed to upon creation of many social media sites. Make sure you have an attorney assisting you in ensuring your digital assets are protected.
The Sick Witch – Have you ever wondered why the Witch is always green? Clearly, she’s sick – which is why she needs to incorporate health related documents into her estate plan! As much as we want to fight it, there is a Sick-Witch in everyone’s future – which is why we all need the following documents in our estate plans: (1) Durable Power of Attorney – this allows you to designate and authorize someone to legally act on your behalf, in the event that you become incapacitated. The instrument will specifically state the powers that you are giving the person that you nominate to act on your behalf. Furthermore, this person must make decisions that are in your best interest, not their own. Take careful consideration in determining who you want stepping into your shoes. (2) Combination Living Will & Designation of Healthcare Surrogate – this outlines important healthcare decisions in advance, and appoints a healthcare surrogate to make healthcare decisions for you when you become unable to do so yourself. Be certain to name someone, otherwise, a proxy may be designated in which you would never chose yourself. You want to choose whose hands your life is in, right?
The Wise Wizard – This Wizard knows that the best magic is that of a Trust. For many, especially young Wizards who have yet to build up their assets, an Irrevocable Life Insurance Trust (“ILIT”) can be very beneficial. For the Wise-Wizard-Parents, you can ensure that you are providing for your children, by having your life insurance policy go into a trust, which incorporates your intent regarding when and how your children receive the money. Furthermore, many people don’t realize that the proceeds of life insurance are included in the gross estate of the “owner” upon death (possibly using up a lot of your transfer tax exemption). Using an ILIT removes the “incidents of ownership” over the proceeds, and therefore your estate does not have to pay estate taxes on it. Additionally, when it is set up for the benefit of your spouse, then passes to children; when your spouse dies, the proceeds will not be included in his/her gross estate either. You can also set up the ILIT to a Dynasty Trust or Generation Skipping Trust, for the continued benefit of future generations. The Wise Wizard can use an ILIT for the following benefits: (1) avoid estate tax of proceeds; (2) shelter property from creditors at death; (3) provide income and support for beneficiaries; & (4) meet the liquidity needs of the Grantor’s estate.
The Go-To-Goblin: This is the big scary monster costume that you can always fall back on. It is composed of the following documents: (1) Living Trust – as discussed previously, a living trust is a great way to avoid probate & protect your assets; (2) Assignment of Property – this is exactly that, assigning your property to your trust. This includes both real & personal property. A trust does not do anything for you if there is no property in it; (3) Last Will & Testament – this is your traditional will that is used upon death to distribute property to beneficiaries, specify last wishes, and name guardians for minor children; (4) Durable Power of Attorney; & (5) Combination Living Will & Designation of Healthcare Surrogate (discussed in the Sick Witch costume above).