be very careful around trusts. They aren't always wrong to establish, but I have seen them used as a profit center for law firms.
if you go to trust ownership it can be a pain in the neck to retitle all your accounts, they could require a second tax return, they could complicate all your transactions, and of course it can cost $10,000 to get set up.
Not only that, but the tax can be higher in a trust. For example an A/B revocable trust where the wife lives free in the deceased husband’s house, the house has substantial appreciation at his death, wife needs to move to a rest home, and needs to sell the asset. The capital gains are locked in from the date of the husband’s death to sale date, subject to state and Federal taxes. In a simple will the house stays within the marital estate.
That said, second marriages, and complicated issues like passing assets on to entities, or incompetent children, financial or otherwise may require a trust document.
Lastly, unless the trust in entity administered, a trustee could violate stipulations of the trust if no one is there perform an over the shoulder look at the administration.
I looked into trusts but for myself the simplest thing was just to assign beneficiaries on all my financial accounts so that nothing goes to probate. When I die, everything is just distributed to the beneficiaries. Doesn't cost anything to set it up like that.
I looked into trusts but for myself the simplest thing was just to assign beneficiaries on all my financial accounts so that nothing goes to probate. When I die, everything is just distributed to the beneficiaries. Doesn't cost anything to set it up like that.
That is what most people should do. People are often fearful of probate, when it is a simple process, and not expensive.
One of the frequently missed issues is when someone holds stock certificates, moves, followed by a stock split, or reorganization. The new shares would be held at the transfer agent, with dividends. Many not knowing they are there. One wealthy client had $100s of thousands in stocks that needed to be transferred to an account. You see this with elderly, or accounts set up as custodial accounts. It is not easy to clean up. Similarly, clients, typically elderly with a deceased spouse, with multiple bank or credit union accounts.
As a practicing CFP I would encourage retirees to clean up and consolidate holdings. The downside is a spouse that has been on the sidelines, or unaware of the complexity of holdings, then is sole handler.
I looked into trusts but for myself the simplest thing was just to assign beneficiaries on all my financial accounts so that nothing goes to probate. When I die, everything is just distributed to the beneficiaries. Doesn't cost anything to set it up like that.
That is what most people should do. People are often fearful of probate, when it is a simple process, and not expensive.
One of the frequently missed issues is when someone holds stock certificates, moves, followed by a stock split, or reorganization. The new shares would be held at the transfer agent, with dividends. Many not knowing they are there. One wealthy client had $100s of thousands in stocks that needed to be transferred to an account. You see this with elderly, or accounts set up as custodial accounts. It is not easy to clean up. Similarly, clients, typically elderly with a deceased spouse, with multiple bank or credit union accounts.
As a practicing CFP I would encourage retirees to clean up and consolidate holdings. The downside is a spouse that has been on the sidelines, or unaware of the complexity of holdings, then is sole handler.
The Grandma that was a Dallas operator at AT&T with a stock investment plan, joint and single holdings. Seriously, going from one company, to half a dozen or more. The good thing is if you call ComputerShare, a large transfer agent, they are very helpful. But, you have to know the right questions. More common problem than one can imagine.
Our situation couldn't be more simple and streamlined. No minors involved, one beneficiary only.
Funny you should mention the beneficiary, "this is it", being stipulated on retirement and stock brokerage accounts in that that is exactly what I was hoping to do with some of the assets in order to simplify. But all to be discussed with the estate planner, of course.
Bit hard to read this one, but it's a serious economist saying, a year ago, that it's 'impossible' for inflation to come down unless wages fall. And guess what? Inflation fell and wages kept going up. It was different this time.
Stephen Miran @SteveMiran Hit the nail on the head...if wages stay high, it's going to be impossible to get inflation durably lower There's a sleight-of-hand going on for those who tell you otherwise: they're either slipping in some assumptions about a productivity boom or a huge positive supply shock Quote Nick Timiraos @NickTimiraos · Jan 29, 2023 Stubbornly high inflation is finally easing as supply chain disruptions fade and interest rates at 15-year highs put the brakes on demand But Fed officials have voiced unease that any disinflation might be short-lived because labor markets are so tight
Our situation couldn't be more simple and streamlined. No minors involved, one beneficiary only.
Funny you should mention the beneficiary, "this is it", being stipulated on retirement and stock brokerage accounts in that that is exactly what I was hoping to do with some of the assets in order to simplify. But all to be discussed with the estate planner, of course.
Trusts sound like a real pain.
The biggest benefit I could see from creating a trust would be to protect my assets from the medicaid spend down should I end up in a nursing home or something like that, but if you have long term care insurance that should mitigate that risk. The lawyers I talked to about it went on and on about what an awful experience probate is and that a trust would help you avoid that but like was said earlier you can avoid probate on a your financial accounts just by assigning beneficiaries. Unless you have vast real estate holdings or something like that creating a trust is probably overkill for most folks.
Retirement accounts are handled thru Beneficiary Form, banks accounts via Payment on Death (POD), and brokerage accounts by Transfer on Death (TOD). Real estate could be handled by adding names to a title, same for autos, but a will would be better in my opinion. The will is submitted to courts, a personal rep is appointed, and that person (likely an heir) executes the terms of the will. Cleans up any loose ends files estate tax return.
Also, unless the estate has no assets, the estate will need to remain open for three years. One can file a quick assessment that would shorten that period to 18 months. Either way the IRS issues a closing statement on the estate. Part of that process is a legal notification to all potential creditors. I advised keeping an account with $5,000 in checking, earning little or no interest. That way additional tax filings should be avoided. Any attorney or accountant fees can be paid from this account, remainder distributed to heirs. Not a big deal, but someone is going to have some work to do. Some as simple as applying for a tax identification number for the estate.
This post was edited 10 minutes after it was posted.
Retirement accounts are handled thru Beneficiary Form, banks accounts via Payment on Death (POD), and brokerage accounts by Transfer on Death (TOD). Real estate could be handled by adding names to a title, same for autos, but a will would be better in my opinion. The will is submitted to courts, a personal rep is appointed, and that person (likely an heir) executes the terms of the will. Cleans up any loose ends files estate tax return.
This is it - you do know that Igy is billing you at $300 an hour for all this useful information? Just kidding. I was the Trustee for my mom a few years ago and it was a hassle but you do what you have to do.
Retirement accounts are handled thru Beneficiary Form, banks accounts via Payment on Death (POD), and brokerage accounts by Transfer on Death (TOD). Real estate could be handled by adding names to a title, same for autos, but a will would be better in my opinion. The will is submitted to courts, a personal rep is appointed, and that person (likely an heir) executes the terms of the will. Cleans up any loose ends files estate tax return.
This is it - you do know that Igy is billing you at $300 an hour for all this useful information? Just kidding. I was the Trustee for my mom a few years ago and it was a hassle but you do what you have to do.
The advice was provided as a service, no fee. One of the advantages of working with a CFP. As you said some of this hassel is just baked in.
This is it - you do know that Igy is billing you at $300 an hour for all this useful information? Just kidding. I was the Trustee for my mom a few years ago and it was a hassle but you do what you have to do.
The advice was provided as a service, no fee. One of the advantages of working with a CFP. As you said some of this hassel is just baked in.
Igy - I don't remember which Olympic trials you ran (maybe 1972) in, but do the current ones bring back any fond memories for you?
I realize I'm late to the party and the meeting with the financial planner has probably already happened, but I'll give my two cents anyway. I would imagine there will (should?) be further interactions, not just a single meeting, so maybe it's not too late anyway. We've recently finished about six months of back and forth with a fee-for-service financial planner.
Maybe the first thing I'll flag is that if you are not paying this person directly, either on an hourly basis or some other way, then their interests may not fully align with yours, but there could be some hidden incentives that might affect their advice to you. If, for example, they take referral fees or commissions from other parties they might be inclined to push to toward them even though that might not be in your best interest.
Treat the financial adviser as an expert and listen carefully to their advice, but not to the exclusion of your own instinct and experience. If something doesn't ring true, don't necessarily dismiss it, but do some further research before deciding.
This could be a good opportunity for a complete check on financial health to set the stage for a successful retirement. You need to start with some clear goals, objectives and intentions, which can take some effort to tease out and write down clearly and succinctly.
I imagine the planner will want to know your spending habits and plans. It can take a fair bit of work to come up with a good estimate. If you haven't done that already, they should guide you through the process but it could take a year or two of tracking (either from now onward or by looking back through complete records if you have them) to get a great fix on them.
They'll need a good idea of the current situation for net worth, holdings, cash flow, etc, and with your assumed spending can build projections and then test baseline assumptions against a range of possible changes.
Investment planning should be a big part of this. I expect any financial planner worth their salt will likely tell you to be a little less aggressive in your investing, and also to make fairly conservative assumptions for long term returns on your investments.
Tax planning, including key decisions you can take to optimize taxes and after-tax income, should be a big part of the discussion, which might spend time on when / how to draw down tax-sheltered accounts versus any pensions etc. This should include consideration of taxation of the final estate left behind for any heirs.
Probate probably shouldn't be a major concern (it's not THAT costly, and you can't avoid it completely with any kind of sizable estate), but you can avoid it for some components as others have already commented.
Of course estate planning should be a big topic, and that ties in with the other topics already mentions.
Depending on your particular situation, they will hopefully have other specific advice and guide you toward things you didn't know that will help you make better decisions for the remaining decades.
Retirement accounts are handled thru Beneficiary Form, banks accounts via Payment on Death (POD), and brokerage accounts by Transfer on Death (TOD). Real estate could be handled by adding names to a title, same for autos, but a will would be better in my opinion. The will is submitted to courts, a personal rep is appointed, and that person (likely an heir) executes the terms of the will. Cleans up any loose ends files estate tax return.
Why not just add all of that stuff to the trust? Beneficiaries receive it without any hassle.
Thank you very much to "comfortably retired", GOI, Agip, Sally, "this is it", and "wondering".
Comfortably retired, it is not too late to mention those things since we meet later this afternoon. He is an attorney, who specials in among other things, estate planning, we have worked with before on our Will, and is highly trusted in that he is what one would call a friend of the family and someone we get together with once or twice a year. As one of the owners of the small independent firm, he doesn't work for or represent anyone else.
Lots to digest here and I do appreciate the info. My gut is telling me that our situation will be frighteningly simple and I have already done the bulk of the strategizing as to the larger estate planning strategy, and just want a professional opinion.
We seem to have weathered Tuesday's announcements from Google, Microsoft, and AMD without too much damage. Tu. after hours was massively down as was Wednesday, but it is clawing back much of that today.
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