Partners in Life Planning
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You Can’t Take It With You, But You Can Retain It!

Inevitable, Part of the total financial planning process I work on with clients must include estate planning and how assets can best be distributed upon death.

It is not a subject easily embraced by many people, but nevertheless an important matter that has serious implications for the family involved

Perhaps the following strategies will help you in your endeavor to achieve the goals that most parents of adult children try to achieve- upon the passing of the first spouse, support of the surviving spouse.

Once the surviving spouse is gone, the objective is to pass as much as possible to your children while harboring it from taxation, nursing home or medical costs, creditors and the like. With some foresight, planning and guidance from your trusted advisor, it can potentially be done.

An irrevocable trust is an instrument that removes assets placed into the trust from your estate, meaning technically, you don't now own them.

The terms of the trust: who eventually gets the assets, how it is utilized, how it is invested, who manages the assets and a host of issues are decided by you with the assistance and guidance of your planner and trust attorney.

The key here is to remove the assets from your estate for a minimum of 5 years (present law) so if you were to find yourself in need of nursing or medical care, the expenses shall not be borne by this block of money. If done correctly and within the guidelines of current tax law, you may find yourself applying for public assistance to cover your medical costs while your block of trust assets remain intact, to be left to either your children, or to support your healthy or surviving spouse.

At an average cost of $12,000-$15,000 per month for nursing and late stage medical costs, this estate planning tool can help to preserve hundreds of thousands of your hard earned dollars to be passed on as you had intended, instead of being used for late-life care.

Long Term Care Insurance is a tool that should be incorporated into your estate plan in conjunction to the above to combat the possibility of high medical costs depleting your financial estate. It is important to realize that if one spouse or partner is in need of high cost medical care, one must remember that there is usually a healthy partner that will continue to have a need for income and assets to support themselves: if the family money is depleted on the ill spouse, how will the healthy spouse continue to live in the manner that he or she has been accustomed? At that stage in life, going to live with your children or having to be forced to sell your house is not a very palatable alternative in addition to caring or losing your partner. Preparation is the key.

Gifting is a tool that may be utilized to reduce one's estate. Present tax law allows each of us to gift to as many individuals you like at a rate of $13,000 per year. Gift splitting, a technique that allows you to double that to $26,000 per year per individual can be utilized if you have a spouse to include in the gifting program.

Using simple math, you can see how you may utilize this tool to reduce the size of your estate should you find yourself in the above situation. Remember: a gift is a gift- once you give it, it's up to the donee to do what he or she wants with the gift, so be sure to be aware of this ramification.

Pre-paying funeral and final costs can be done to further reduce your estate, and take the burden off your surviving family by arranging your funeral yourself.

As morbid as it may sound, it makes sense from an estate planning point of view, and will reduce the strain to your loved ones at a time most delicate. Besides- if you're healthy at the time, use the occasion to celebrate your life- it's your funeral- deal with it as you so choose.

Helping families is one of the most satisfying facets of my business. If you have not done your estate planning and have not considered the alternatives available to you to pass your estate to your surviving partner and children, give me a call- let's look at it together. It's what I love doing...

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