Friends of Colwyn:
Welcome to 2025! I hope you had a wonderful holiday season and that your new year looks positive and hopeful and healthy and happy.
As we start the new year, I wanted to send you a quick reminder about some estate and life planning tips regarding account beneficiaries, living wills, final wills and trusts.
Here is a summary of how each works:
Account Beneficiaries: we can set up your account with Schwab to have a beneficiary or beneficiaries. This allows the funds to easily move upon your passing to the beneficiary without any probate or legal costs. These can be added, changed or adjusted at anytime with the right form, but it has to be done before you pass away????
If you have a pre-tax account (IRA) and the beneficiary is a person, they can choose to inherit the account as an IRA and not pay any taxes and just have the inherited IRA in their name now, or they can cash it out and pay the taxes.
Living Will: a living will is used to dictate your wishes for right to life and resuscitation in the case of becoming incapacitated and unable to make your own decisions, this can also include thoughts about if and who to grant medical power of attorney or full power of attorney. There are significant legal ramifications to consider for any selection here so you are sure you have what you want.
Final Will: a final will is a document that expresses your wishes for the distribution of your assets upon your passing. A final will should match the complexity of your wishes for your assets upon your passing. If you do not care much about your things and where they go or who gets them, then this is very simple, if you do have more complex wishes, then other legal instruments may be needed. Your final will should reviewed often to make sure it fits your current feelings and wishes and it should be notarized and have witnesses sign it.
Trusts: A trust is an entity by itself that operates independent of you but it can hold assets and protect them from possible liabilities and help with estate planning and taxation. A trust can be costly to set up, but if your wishes for your estate are complex and the amount you are trying to protect is significant, then a trust may be needed. A trust can not hold any pretax money, only a person can, so you cant transfer IRA or 401K funds into a trust unless you have paid the taxes and the funds are no longer pre-tax. There is no fixed equation to determine if you “need” a trust or not, we just consider the facts and see what works best.
Here are my reminders for the new year!
- Please review your account beneficiaries and if we need to make any adjustments or changes we can!
- Review your living will if you have one, if not, consider a living will, I have some templates that you could use and we can talk more about it.
- Review your final will, make sure your witnesses are still alive and that your schedule of assets to be dispersed including personal property, is as complete as you want it to be. I also have a template you could work with for a final will if needed.
- If you have a trust, lets review everything that is in the name of the trust and make sure you are protected, if you think you may need a trust we can chat through those options as well.