By Mitch Adel
As the holiday season begins, the onslaught of commercials, sales and specials can be a distraction. While it’s great to give and receive gifts, we should take a step back and remind ourselves what is truly important: spending time with family, friends and loved ones. For those we care about most, let’s go beyond buying them a trinket and focus on leaving them something that will last.
Planning for the future is rarely easy, and making tough decisions about finances can be a special challenge, but you owe it to yourself and your loved ones to think hard about how the decisions you make today will impact their future. The end of the year is actually in many ways the perfect time to review existing estate plans and ensure that your assets are going where you intend them to go. It is also an opportune moment to watch for and respond to important legislative updates to tax and estate law.
While these decisions might be a little tougher than what
color sweater to buy as a gift this holiday season, the payoff
is well worth the extra effort. And while the process can feel overwhelming, good solutions (and good guidance) do exist. Making the right decision for your circumstances is all about being transparent, working closely with both family and outside advisers, and using a few strategic ideas to guide you:
Making a list
Keeping your assets in the family is a top priority for many of us. Whether it is a will or a trust, most people choose to leave their assets outright to beneficiaries (typically their children). But what if you are not certain about family circumstances, or are worried about debts or other legal complications? When you leave your assets directly to your beneficiaries, those assets can be exposed to creditors, spouses and lawsuits.
A better plan, if you are worried about the impact of family issues on your estate, is to consider a special trust to creditor
and predator-protect the inheritance you plan to leave behind.
It ensures that assets left to your children will be protected
from their spouses in the event of divorce and protects their inheritance from their creditors in the event of financial hardship or if they are sued.With this special trust, you have the option
to name your child both as trustee and beneficiary upon your passing, or you can name another, trusted individual as trustee if your child or grandchild needs help managing their money. Additionally, there are special trusts and provisions to ensure that any IRA distributions to your children will be maximized and not lost to lawsuits, divorce or wasteful spending. Upon your child’s death, the remaining assets will then go to the next set
of beneficiaries you choose.
These special trusts provide your heirs with the benefits of access to the assets you leave them while protecting those assets from outside parties. In many ways this is the best of both worlds: your children/beneficiaries have access to income they can use
for their health, education, maintenance and support (the precise guidelines are up to you and can differ from one trust to the next), but those funds are protected, and you still have a say in where that money goes after your child passes.
Checking it twice
Another benefit of the estate planning process for many families is structuring your estate in such a way that your beneficiaries avoid the probate court process. Probate court can mean delays in when your beneficiaries have access to your assets after your death as well as more fees to attorneys. Proper planning can avoid the problems with probate all together.
When guardianship and adoption are in the picture, it’s particularly advantageous to know all of the decisions are yours to finalize. In cases where adoption, mental competency proceedings, or guardian appointments come into play during probate, the introduction of an outside agent leaves a ward or beneficiary
open to exploitation by an unscrupulous guardian.There are well-known stories where court-appointed conservators have taken advantage of vulnerable individuals and essentially plundered estates, creating new trusts and naming themselves
as trustees, selling off property and excluding children from their rightful inheritance. Unfortunately, even in some of the most egregious examples of abuse, probate courts do not always catch the problem.
While the State of Ohio recently strengthened existing laws to restrict predatory guardians, no statute is perfect, and problems still exist. If you want to make sure that your estate and your family do not fall through the cracks and fall victim to such a tragedy, carefully pre-planning your estate and representation documents can minimize the chances that guardianship will be needed—and greatly reduce the odds that a stranger will have undue influence over your estate.
The holidays should be a joyful time for you and your family. Make sure that you do not waste a minute of it worrying about your legacy or your family’s financial security: Check it off the list!