Estate Planning Workbook

Transcription

1 Transamerica Advanced Markets Estate Planning Workbook Transamerica Resources, Inc. is an Aegon company and is affi liated with various companies which include, but are not limited to, insurance companies and broker-dealers. Transamerica Resources, Inc. does not offer insurance products or securities. This material is provided for informational purposes only and should not be construed as insurance, securities, ERISA, tax, investment or legal advice. Although care has been taken in preparing this material and presenting it accurately, Transamerica Resources, Inc. disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. You should advise your clients to consult and rely upon their own independent advisors regarding their particular situation and concepts presented here. Securities may lose value and are not insured by the FDIC or any federal government agency. They are not a deposit or guaranteed by any bank, bank affiliate or credit union. AMCEPG1014

2 The Importance of Estate Planning Many people view estate planning as something to be addressed later in life or only when they have accumulated substantial wealth. However, estate planning is important from the day a person buys their first home, contributes to an IRA or seeks the guidance and advice of a financial professional. Estate planning is an essential part of every financial plan and employing even the most basic estate planning concepts and strategies can be very beneficial. A basic understanding of estate planning can help you leave the legacy you desire, help reduce transfer taxes, and avoid inheritance missteps. This brochure provides actionable steps to help you start the estate planning process. Once you have reviewed this brochure and gathered the necessary information, you will be ready to begin organizing your plan with your financial professional. Ultimately, a legal advisor familiar with your personal circumstances should be consulted on navigating any federal or state laws that could impact your estate plan. Estate Planning Action Steps 1. Create an inventory of your assets and estate planning documents 2. Review and consider the ownership structure of assets 3. Review and update beneficiary designations 4. Identify, discuss, and document your goals and strategies 2

3 Step 1 Create an Inventory Organizing your accounts and estate planning documents will make managing your estate easier for you and your loved ones. To begin, create an inventory of all personal assets, including investment accounts, retirement accounts, insurance policies, real estate, and business interests. Also, locate all legal documents that govern your estate planning objectives including wills, trusts, Power of Attorneys, and medical directives. Gather and organize documents: The following is a list of documents that may impact your estate plan or control the execution of your estate planning goals. Place a check next to each of the items you will have to gather and organize. Summary of debts and tangible assets Financial account statements Beneficiary designations Wills Trusts Summary of digital accounts with user names/passwords Tax returns Divorce decrees Real estate deeds Passport numbers Power of attorney Birth certificates Medical directives Ongoing bills Business or partnership interests Marriage license Vehicle titles Insurance policies Periodically review this list with a financial professional to help ensure your personal circumstances are taken into consideration in your overall financial plan. Make certain your executor(s) and trustee(s) know where these important documents are located and that they are kept in a safe location. Step 2 Review the Ownership of Property and Accounts The way you own or title property and accounts has estate planning implications. Improperly titled accounts and outdated ownership registrations may result in unintended consequences. An experienced professional can help eliminate conflicts between account registrations and other estate planning instruments by reviewing how property and accounts are titled. Review the ownership/titling structure on: Real estate deeds Vehicle titles Life insurance policies Bank account statements Brokerage account statements Property can be owned in a number of ways, each with its own ramifications. Your financial advisor can discuss the differences between various ownership titles including property owned individually, property titled in joint names, or property that is subject to community property rights. Your financial advisor may recommend consultation with a legal advisor on titling property in your state of residence. 3

4 Step 3 Review and Update Beneficiary Designations Beneficiary designations are often overlooked but they play a very important role in an effective estate plan. If structured properly, one major advantage of accounts with beneficiary designations is that they can avoid probate. However, improper, outdated, or poorly constructed designations may result in unintended consequences such as assets passing to incorrect beneficiaries or assets passing through probate. What is Probate? In general, probate is the legal process in which a state court validates your will and/or determines how and when assets are distributed. Estate and income taxes and creditors are paid through the probate process. Disadvantages of Probate Delays Expense Access to Creditors Disinheritance Avoiding Probate Well-constructed estate plans with ongoing reviews allow assets to transfer efficiently after death. Ensuring beneficiary designations are accurate and up to date is one way to avoid possible complications with probate. Identify accounts with beneficiary designations: A simple, yet effective estate planning strategy is to review accounts that allow beneficiary designations. Do you have any of the following accounts? Check all that apply. Qualified plans (401(k)s, 403(b)s, etc.) Individual retirement accounts (IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs) Insurance accounts (Annuities, HSAs, Life Insurance policies, Long-Term Care policies, etc.) Education accounts (529 plans, Coverdells, etc.) Transfer-on-death or payable-on-death accounts (Bank Accounts, CDs, Investment Accounts, etc.) Other employer-provided benefit programs (PSPs, DB plans, Money Purchase plans, ESOPs, etc.) If you checked any of the above, gather the beneficiary designation documents. Periodic beneficiary reviews will assist in transferring these accounts correctly to intended beneficiaries. When you assemble these documents, take them to your financial professional for review. While reviewing these designations there are several common warning signs to watch out for. Common warning signs: Look at the accounts with beneficiary designations and review them for potential problems such as: Beneficiary designations that are left blank Your estate is named as the beneficiary A primary beneficiary is listed but there is no contingent beneficiary Outdated designations, where incorrect individuals are listed as beneficiaries Having inconsistencies between your will and beneficiary designations Reviews are especially important for families experiencing life changing events. Life events include marriage, divorce, remarriage, job changes, addition of children and grandchildren, marriage/divorce of family members, and new property acquisitions. Whenever you have a life event, a beneficiary review should be conducted with your financial professional. Common questions: Once you have identified any potential problems with your beneficiary designations, it s important to correct them and ensure they are properly structured to meet your intentions. Answers to these common questions may be of assistance in accurately structuring beneficiary designations: Who are the beneficiaries on your accounts? When were your accounts with beneficiary designations last updated? Have you or anyone in your family recently experienced life changing events? Has your advisor discussed different distribution methods such as per stirpes and per capita? Will restrictions on accounts alleviate concerns about how beneficiaries may spend their inheritances? Keep the answers to these questions in mind when opening new accounts with beneficiary designations to ensure your wishes are up-to-date and current. 4

5 Step 4 Communicate Objectives and Strategies Communicating your goals to your financial professional is vital when developing a strategy that focuses on your specific goals. The more familiar your advisor is with your situation, the more they will be able to assist you. Common estate planning objectives: The following is a list of common estate planning objectives. Place a check next to the objectives you would like to address. Ensure a timely and smooth transfer of assets after death Reduce the amount of assets lost to income and estate taxes Provide for your family while protecting your assets Ensure survival of your business after your death Create directives for incapacity, nursing care, and end of life planning Other: Commonly utilized planning strategies: To achieve your goals, several strategies may need to be implemented. Some common strategies that may be needed include: Trust Ownership Life Insurance Lifetime Gifts and Annual Exclusions Charitable Gifts Trusts are instrumental to the success of many estate planning strategies; primarily they can help with the customized distribution and control of assets. Life insurance is a key component in effective estate plans. An experienced professional will identify products based on specific needs as well as proper ownership and beneficiary options. Gifting strategies provide the enjoyment of seeing the recipient use and enjoy the gift during your lifetime. These strategies can also help reduce the size of your estate for tax planning purposes. Charitably inclined individuals may receive tax deductions while potentially lowering future estate tax liabilities. The applicability of the strategies will depend on your estate planning objectives. Your financial professional can assist you in determining the strategies that are right for you. Because many of these strategies will require legal advice, your financial professional will likely recommend consultation with a legal advisor as part of the implementation process. Congratulations on taking the first step to managing your estate. Now that the process is started, it is important that you keep it up to date. Changes in your life or legislative changes may necessitate changes in your plan. Periodically reviewing your plan with your financial professional and legal advisor can help ensure it continues to meet your expectations. 5

6 Estate Planning Guide Worksheet Step 1 Create an Inventory Summary of debts Insurance policies Financial account statements Personal/legal documents Mortgages Health Employer sponsored retirement plans Passport numbers Loans Life 401(k) Birth certificates Ongoing bills Auto Bank accounts Marriage license Tax liens Other debts Home Long-Term Care Checking Savings Mutual funds Brokerage accounts Annuity contracts Other investments Summary of digital accounts with user names/passwords Tax returns Divorce decrees Business or partnership interests Existing estate planning documents Wills Trusts Power of attorney Medical directives Real estate deeds Step 2 Review the Ownership of Property and Accounts Real property Personal residence Other real estate Insurance policies Bank accounts Brokerage accounts Personal property Automobiles and recreational vehicles Step 3 Review and Update Beneficiary Designations Gather beneficiary designations (check all accounts that apply) Qualified plans (401(k), 403(b), etc.) Individual retirement plans (IRA, Roth IRA, SEP IRA, SIMPLE IRA) Insurance accounts (Annuities, HSAs, Life Insurance policies, Long-Term Care policies, etc.) Education accounts (529 plan, Coverdell, etc.) Transfer-on-death or payable-on-death accounts (Bank Accounts, CDs, Investment Accounts, etc.) Other employer-provided benefit programs (PSP, DB plan, Money Purchase plan, ESOPs, etc.) Step 4 Communicate Objectives and Strategies to the Estate Planning Team Common estate planning objectives to discuss with your financial professionals Ensure a timely and smooth transfer of assets after death Reduce amount of assets lost to income and estate taxes Provide for family while protecting assets Ensure survival of your business after your death Create directives for incapacity, nursing care, and end of life planning Other: 6

7 Contacts Team member Name Phone number Financial planner Attorney Executor Insurance specialist Accountant Trustee Notes 7

8 Transamerica is prohibited by law from providing tax or legal advice. We inform you that this material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code and/or any other relevant laws. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented herein. transamerica.com