Estate Planning

Preserving Wealth for Your Heirs Requires Planning

Estate planning is designed to help us know that the wealth we have worked so hard to accumulate over the years is preserved for our heirs. Whether it's providing income for a spouse, educating children or grandchildren, or leaving money to a favorite charity, we all want to know that the proceeds from our estates will be used to fulfill our wishes.

Yet, without planning, large portions of estates can be sacrificed to taxes. As CERTIFIED FINANCIAL PLANNER™ Professionals, our job is to help you identify potential estate planning issues and to work hand in hand with other professionals who will help create your estate plan.

What is a trust? A trust is a legal agreement between two parties: the person who creates the trust and the person, institution or independent trust company responsible for administering the trust, known as the trustee. The trustee manages the assets placed in the trust for the benefit of a third person, the beneficiary.

How can trusts reduce your estate? Assets irrevocably placed in a trust are removed from your estate. One example of a specific type of irrevocable trust is a life insurance trust. This allows the trustee to purchase a life insurance policy on the life of the person who owns the estate. Usually, the trust is the beneficiary of the policy. After all debts of the estate are paid, the trustee distributes the proceeds of the life insurance policy to the beneficiaries of the trust, according to the instructions in the trust. The most important benefit of a life insurance trust is that it is not included in your net estate because you do not own it directly. By transferring ownership of the policy to a trust, your estate taxes can be dramatically reduced.*

How do trusts help ensure that your wishes are carried out? Everyone has different dreams about how the proceeds from their estate should be used. A way to ensure that your wishes are carried out is by providing specific instructions in a trust. No one can change these instructions and the trustee must follow them to the letter. Whether it's providing income to a surviving spouse, funding education for children or grandchildren, or contributing to a favorite charity, the trustee complies with the instructions in the trust.

*Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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