How can trust simplify estate planning?

Providing for your family is a humbling feeling, bringing you motivation to keep going and building your assets. While no one likes to think about their final days, they can happen whether they are planned for or not. Securing assets and loved ones is something to consider, especially for those with families that depend on them.

Below, we’ll discuss options to secure assets and introduce you to how a trust could simplify the process. Upon completion of securing your assets, you’ll feel at ease, knowing your family is taken care of, even after you’re gone.

 

Will

A will is a way to plan your final wishes. With a will, you have options to plan your funeral, pass on your assets, and delegate someone who can get the job done. Without a will, your assets can go into limbo, passing to your closest kin or transferred to the state.

Instead of leaving loved ones to juggle with your assets, a will can organize everything so that, when the time comes, everything runs smoothly. You can assign tasks to those who will oversee your final wishes and even give someone you trust the right to make medical decisions if need be.

Creating a will is affordable and simple, requiring that you write your wishes, provide a few documents, and inform the person you’ve chosen as your power of attorney.

 

Powers of Attorney

Choosing a power of attorney is a critical part of creating a will. Your chosen power of attorney will take action when you’ve passed to start fulfilling your final wishes. They will also step in in the event that you become unable to do so.

For example, a medical power of attorney will make decisions about feeding and breathing tubes, even making calls for life support in the event of a life-threatening situation. Choosing a power of attorney requires careful thought and delegation, choosing someone that you can trust to get the job done.

 

Adding Layers of Protection

Your power of attorney might be the one to oversee that your wishes are fulfilled but, they will not be the one to fund them. Coming up with the funds needed to fulfill one’s final wishes can seem like a challenge, which is why it’s recommended to add an extra layer of protection.

On top of creating a will, it’s recommended to secure a life insurance policy, which can kick in and help relieve financial stress when it’s needed the most. For families who are young, term life insurance is probably the best option, with affordable rates and customizable coverage.

Those who are in their later years can consider a whole life insurance policy, getting coverage until their death. Some whole life insurance policies come with cash value options, which can be treated as an investment with options to withdraw or take out a loan at any time.

 

Selecting Beneficiaries

With both life insurance and last wills, you’ll need to select beneficiaries. Beneficiaries for life insurance and your last will are treated differently, something you should consider before selecting.

 

Life Insurance Beneficiaries

Life insurance beneficiaries are those who will receive the death benefit from your insurance provider in the event of your death. The death benefit is meant to relieve financial stress and help your loved ones manage your assets when you’re gone.

 

Last Will Beneficiaries

Beneficiaries for your last will are those who will receive your assets, which could include real estate, vehicles, and even family heirlooms. Whoever you pass your estate onto becomes responsible for your property, which could come with debt in some cases. These could be personal loans or payments still being made on items that are passed down.

Though the last will is meant to note all of your final wishes, it does not interfere with life insurance and cannot change the beneficiary who will receive your death benefit. Keeping that in mind while selecting your beneficiaries for each is key to choosing wisely.

 

Watch for Taxes

Your estate is subject to taxes, the higher the amount, the higher the tax rate. In addition, some of your assets may still come with a cost, one that your loved ones will have to take over and pay. A life insurance policy can help with both of these financial stresses, taking care of taxes and still leaving enough for your loved ones to transition comfortably.

It’s not just about taxes and your assets, but also about probate fees, which can amount to upwards of 1.5%. If you have a sizeable estate, that 1.5% can be costly, which is why alternative investments outside of your estate could come in handy.

 

Consider a Trust

A trust is a great option for those that want to secure their assets and protect their loved ones without the hefty fees upon death. Though they can be costly to set up, trusts will allow individuals to choose beneficiaries and distribute the trust as they see fit.

For instance, they could choose to award their children a trust once they turn a certain age or they could pay the monthly payments and distribute the trust that way. It’s also an option to add the terms of the trust into a will, which will start upon the death of the creator.

Trusts can get costly on their own. One alternative to that is writing them into the will, though it needs to be properly worded in order to benefit creators. That’s why working with a professional is recommended, ensuring that assets are secured without added fees and taxes.

 

Give Sim a Call

A consultation with Sim will point you in the right direction to securing your assets. Her experience with personal finance and investments can help create the perfect combination that maximizes your security without increasing tax rates and fees.

When it comes to your life’s earnings, you should be able to enjoy them and pass them on to the ones you love, securing them while you are here and resting assured that they will be secured when you’re no longer here.

 

FAQs & Helpful Resources Regarding Life Insurance for Estate Planning