Estate planning is an important part of your retirement, especially if you want to have control over how your assets are handled and who they will get passed on to.
A beginning step in estate planning is creating a trust. A trust is a documented agreement that spells out rules you want followed for assets left behind, that will be held in “trust” by your beneficiaries.
There are a few common reasons behind creating a trust: to reduce tax liability, avoid probate or protect specific property in your estate.1
Taxes will be taken out of a trust but according to which type of trust you choose. This gives you control over when and how they will be taken. A trust will help minimize the probate process. This ensures that your assets are distributed without interference from a court. Probate can also cost between 5% to 7% of your estate.2 A trust also helps keep your trust matters private because probate puts your assets on public record.
If a well-structured trust is in place, it will tell which parts will go to beneficiaries and/or what parts should be invested into growing wealth. You can also set up specific disbursement details, like having the trustee distribute certain amounts until the beneficiary comes of age.
The trust creation process will include: naming your trustee, naming the beneficiaries and deciding how you want your assets to be dealt with. This involves paperwork and a fee to get processed.
There are different kinds of trusts to choose from. Here are a few types to know when looking into trusts. The two most basic options are: a living trust and a testamentary trust. A living trust is set up by a living person. A testamentary trust is created in a will and effective only after the person’s death.3
Each trust provides different specifications to meet different needs. Within living trusts, you can choose it to be revocable or irrevocable. Revocable allows you to maintain control and make changes at any time. In irrevocable trusts, the assets are not controlled by you because beneficiary consent may be required. Yet, appreciated assets in an irrevocable trust aren’t subject to estate taxes.
There are also other types of trusts that are for specific circumstances. It will help the process go smoothly if you choose to receive financial consulting and hire an attorney. These two components will assist you in making the right decisions for your needs.
Deciding how to protect your assets is important when estate planning. If you plan on leaving assets behind to your beneficiaries you should decide what type of trust would be most beneficial for you. Our team at Miramontes Capital wants your estate planning to work for you. Consult with one of our financial architects to help define your options.
1. “What is a trust?” Estate Planning for Dummies. http://www.dummies.com/personal-finance/estate-planning/what-is- a-trust/. Web.
2. “Estate planning: Types of trusts.” CNN Money. http://money.cnn.com/pf/money-essentials-trusts/index.html. Web
3. “What Kinds of Trusts are there?” CNN Money. http://money.cnn.com/retirement/guide/estateplanning_trusts.moneymag/index2.htm. Web
——
FOR MORE INFORMATION REGARDING ESTATE PLANNING CONTACT MIRAMONTES CAPITAL.
——
If you’re interested in reading more tips on preparing for retirement, plus real stories of retirees on what they wish they would have done differently, we’ve written a book just for YOU.
And the best part – since you’re on my email list, you can get it completely FREE (normally it’s $17.95 on Amazon)!!
Click here to get your free copy today.
In this book you’ll find valuable information on: – Adjusting to retirement on a personal level
– Protecting your assets
– Pensions, IRAs, and 401(k)s
– Mutual funds and annuities
– Protecting your principal
– Real life examples to put this all into perspective for you – And so much more
——
Interested in more information? We’ve created a free workshop where you can come in and meet us, spend time getting to know our team, and get all of your retirement questions answered. There are only 20 seats available for each workshop, and they fill up fast! Once they’re full, you will have to wait until the next one, so reserve your spot now by clicking here.
You should leave this workshop feeling confident in what your next steps should be, whether you’re 2 years away from retiring or 6 months.
This is your chance to get your questions answered – once and for all!
Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.