Having details about assets—and debts—documented and handy is a great jumping off point for estate planning. With a balance sheet in hand, it’s easier to get appropriate estate planning assistance. It’s also easier to understand exactly what you will be asking your representative to do when it comes to overseeing your intentions.
Add It Up
If we are fortunate, we accumulate a lot along life’s journey—more then we may realize. Experts at Vanilla suggest including these categories of assets on a balance sheet:
- Real property: Any land, building, or residence that you own or have a mortgage on.
- Bank accounts: Checking, savings, certificate of deposit, and money market accounts.
- Digital assets: Many estates overlook digital assets such as airline miles, credit card reward points, cryptocurrencies, and log-in credentials. But this blind spot could lead to identity theft and unnecessary taxation.
- Vehicles: Automobiles, boats, motorcycles, and aircraft.
- Retirement accounts: General pension, 401(k), 403(b), IRA, Simple IRA, SEP IRA, Roth IRA, HSA, and ESA.
- Investments: General investment account, mutual funds, ETF, stocks (equities), bonds, money market, and Treasury bills.
- Insurance: Term, whole life, split-dollar, group life, and annuity.
- Promissory notes: If you loaned money to a family member with a written promise of repayment, it’s crucial to include the amount in the estate.
- Business interests: You will need an attorney to help determine which business assets are held…and which assets belong to the business structure.
The sum total of our assets are considered our estate, and when we die, the debts we owe “transfer” to our estate and must be paid off before our beneficiaries can receive the gifts we intend for them. Estate planners point out: “Debts are always going to be the responsibility of the estate. As long as they’re legitimate debt, like medical bills, hospital bills, credit card bills, they don’t go away just because you die….The…named executor or trustee will have to gather information about what debts are outstanding at death and deal with it at that time. The beneficiaries receive whatever remains at the end of that repayment process.”
With a clear picture of our finances in hand, we can effectively develop an estate plan that uses a will, a trust, or a combination, to organize how our affairs are to be handled, and appoint a representative, often referred to as a fiduciary, to oversee them. Keep in mind that a fiduciary shoulders a big responsibility: “A fiduciary is a person or entity responsible for carrying out your…wishes. The fiduciary makes crucial decisions…in the event of death or incapacitation.” Choices about fiduciaries depend on the nature of your affairs and the estate planning tools you choose. For example, if you create a will, you will designate an executor to oversee your affairs after you die.
If you create a trust, it can be set up so that a trustee manages your affairs should you become incapacitated Essentially, a trustee uses “trust assets in a way that aligns with the wishes outlined in your…trust document. Although the trustee manages the trust’s assets, the trustee does not personally own them.” Importantly, if you are responsible for minor children or adults with special needs, you will likely also need to designate a guardian who will become legally responsible for them: “Guardians are usually trusted family members who your client is confident could provide sufficient care for the child or adult dependent, factoring in their age, health, and financial stability.” Learn more about fiancial guadians right here.
As you work on your estate plan and designate fiduciaries, be sure to arm them with an understanding of their duties and practical information too. Given the responsibilities involved, fiduciary bonds are commonly required. Essentially, fiduciary bonds, such as executor bonds and trustee bonds, guarantee the faithful performance of the representative appointed. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain an executor bond, a trustee bond or a guardianship bond. Just get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even the estate planning office.
Obtain Guardianship Bond Here.
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