Tahoe-Truckee Market Beat: Estate planning — be careful, update regularly | SierraSun.com
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Tahoe-Truckee Market Beat: Estate planning — be careful, update regularly

Ken Roberts
Special to the Sun

Benjamin Franklin once said, “In this world nothing can be certain, except death and taxes.”

Proper planning can make your loved ones’ life a lot simpler and in many cases have an impact on your net worth.

Estate planning is one area that you shouldn’t overlook, even if you don’t think you may have much of a problem.

For 2015, the estate tax limit is set at $5.43 million; estates above that level will be subject to federal estate tax, which can be as high as 40 percent. Just because your estate is below $5.43 million doesn’t mean that planning isn’t needed.

A simple revocable living trust can help your assets get transferred to your designated beneficiaries without having to go through the probate process, which can be expensive and time consuming.

Life insurance can be a good tool to help with estate liquidity and can provide some financial leverage in the event of an untimely demise.

Other documents that are very important include what’s known as a pour over will, which covers any assets not mentioned in your trust and a durable power of attorney.

You need to designate someone to make important financial and medical decisions for you in the event you become incapacitated.

It’s very important to sit down and review your plan periodically after it’s been completed.

Many people make a good sound plan, but then fail to update and as a consequence, assets end up going to ex-spouses or others that the grantor no longer wants as beneficiaries. Review your beneficiary designations on a regular basis.

Qualified retirement plans like IRAs and 401(k) s can be transferred directly to beneficiaries on a tax-favored basis without going through the probate process.

Some individuals still prefer to establish trusts for their retirement plan assets so they can control the distributions to their beneficiaries.

You can imagine what might happen if an 18-year-old inherits a large sum of money. Yes, it can get spent pretty quickly. By using a trust, those distributions can be spread out over many years.

Trustee selection for your trust is another important consideration — many people use a family member, and others prefer using a professional trustee to help avoid potential family conflicts.

Plan carefully and update your plan on a regular basis.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.


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