By Timothy Barrett, Trust Counsel
Have you ever attended a conference where a panel shared tips for enhancing your financial well-being? This article provides 14 valuable tips to help you better understand and revise your estate planning strategies while fostering positive relationships with your trustee, estate planner, accounting firm, and other financial advisers.
Tip 1: Engage a Professional Trustee
Consider involving a professional trustee in your estate planning process. Effective collaboration will usually lead to a more comprehensive plan and streamlined administration.
Tip 2: Business Understanding
Ensure your estate planner is familiar with your business operations. Organize a “Take Your Adviser to Work Day” so they can observe your business practices and understand the roles of your key employees, including family members working in the business.
Tip 3: Death Benefit Options
Consult with your legal adviser about using transfer on death (TOD) and payable on death (POD) options to pass on accounts or assets to your beneficiaries. Be cautious, as many financial institutions promote these options without fully explaining the potential risks.
- Consider the implications if the named payee passes away.
- Understand how the funds are distributed among heirs.
- Avoid the overuse of TOD/POD accounts to ensure your executor has enough liquidity for estate debts and taxes.
Tip 4: Reviewing Business Agreements
If you own a closely held company, ensure your estate planner examines the buy-sell provisions in shareholder and operating agreements. These terms should align with the liquidity available to your estate.
Tip 5: Addressing Substance Use
Ask your estate planner to incorporate protections against substance abuse in your trust documents. Given the rise in substance abuse issues, it’s vital for your trustee to have authority to act in the best interest of your beneficiaries:
- Make payments directly to vendors rather than to beneficiaries.
- Implement treatment programs using trust funds.
- Withhold distributions until certain treatment standards are met.
Tip 6: Clarity in Communication
Encourage your estate planner to adopt active voice in all documents and communications. This approach eliminates ambiguity and provides clarity regarding who holds responsibility.
Tip 7: Safeguarding Personal Information
Be vigilant regarding your personal information and documents. Always communicate securely with your estate planners and financial advisers, utilizing encryption and secure systems for document transfers. Avoid opening suspicious emails or attachments, even if they appear to come from known contacts.
Tip 8: Understanding Trustee Duties
Discuss the trustee’s standards of care with your estate planner. Being informed about the responsibilities and liabilities of trustee(s) and trust advisers is crucial for trust administration.
Tip 9: Absolve Successor Trustees
Ensure your trust absolves successor trustees of prior acts committed by the predecessor trustee. This precaution reduces potential liabilities and clarifies responsibilities.
Tip 10: Document Your Tax Matters
Do not rely solely on your memory or summaries from other advisers regarding your gift and estate tax returns. Maintain actual copies of all relevant documents along with any necessary appraisals to assure alignment in records.
Tip 11: Update Beneficiary Designations Promptly
After completing your new or updated estate plan, immediately update your beneficiary designations. Consult your estate planner to ensure all documents reflect necessary adjustments.
Tip 12: Beneficiary Rights
If you are a beneficiary, schedule meetings with your trustee to discuss trust administration. Key topics should include:
- Frequency of statements or annual accountings.
- Qualifying for distributions from the trust.
- Trustee’s discretion in spending trust assets.
- Impact of your income and assets on trust distributions.
Tip 13: Trust Restatements
When updating your estate, consider preparing trust restatements and new wills instead of amendments. This simplifies the process and minimizes confusion over document changes.
Tip 14: Unified Accounting Services
Utilizing the same accounting firm for your personal tax returns and fiduciary tax returns may result in cost savings and improved efficiency. Coordination between CPA firms can lead to advantageous arrangements.
Disclaimer
This article reflects the views of its contributing adviser and does not necessarily represent those of iBestTravel’s editorial staff. You can verify adviser credentials with the SEC or FINRA.
