With love comes responsibility, and one of those responsibilities is managing your finances as a couple. You both have your own individual accounts and properties, but you also have shared assets that you’ve acquired together. The question then becomes, what happens to all of these accounts and properties when one or both of you pass away?

The answer is not an easy one, but fear not, because there is a unique estate planning tool that can help alleviate some of the stress that comes with making such decisions. It’s called the pour-over trust, and it’s specifically designed for married couples who think about their accounts and property as “yours, mine, and ours.”

What is a joint pour-over trust?

A type of trust that holds your and your spouse’s joint property. You can create this trust together and name yourselves as the current trustees. When one of you passes away, half of the joint trust’s accounts and property is distributed to the deceased spouse’s separate trust, and the other half is distributed to the surviving spouse’s separate trust.

To make sure everything goes according to your plan, you may need to create three trusts – the joint pour-over trust and one separate trust for each spouse. Jointly owned property goes into the joint pour-over trust, while separately owned property goes into each spouse’s separate trust. This allows you to provide different instructions for handling jointly and separately owned accounts and property.

Once the first spouse passes away, the joint pour-over trust has no more work to do, and it won’t require ongoing administration. This makes it an efficient estate planning tool for couples who want to simplify the process of managing and distributing their assets.

What are some other benefits of a joint pour-over trust?

Ease in trust funding and administration

A joint pour-over trust is a trust that you and your spouse can use to manage your shared accounts and property. It’s helpful because both of you can control it, and you can easily transfer your joint assets into it.

Avoids probate

Avoiding probate is a common reason why people consider creating a trust-based estate plan. If you and your spouse put your joint accounts and property into a trust, it can help your loved ones avoid probate in the event that you both pass away at the same time. Your chosen backup trustee can carry out the instructions without court supervision.

Keep things separate

If you and your spouse have joint accounts and property, putting them into a joint pour-over trust can help keep them separate from your individual accounts and property. This makes it easier to manage your assets according to your wishes. However, it’s important to consider whether putting all of your accounts and property into a joint trust is the right choice for you. If some accounts or property have already been handled separately, combining them in a joint trust could make things more complicated and go against your wishes. It’s important to think through the pros and cons and make the decision that’s best for you and your family.

We can help

Just because you and your spouse have both joint and separate accounts and property doesn’t mean that you can’t plan for how those assets will be distributed after your death. By working together, we can evaluate all of your accounts and property and discuss your wishes for how they should be handled. We can then create an estate plan that takes into account your specific circumstances and ensures that your assets are distributed according to your wishes.

Reach out to us today and we can create a plan that works best for you, your spouse, and the rest of your loved ones.

When you are married to someone who is significantly older or younger than you, planning for the future can be different for each of you. To make sure you and your loved ones are protected, it’s important to have a detailed financial and estate plan. To make sure your plan works as intended, you should have an open and honest conversation with your spouse about important financial and estate planning topics.

About Employment

It is important to discuss your employment plans with your spouse. Your job may provide you and your spouse with health insurance and income, but it can also take up a significant amount of your time.

If you or your spouse are currently working, it’s important to talk about what you both want to do in the future. If one or both of you plan to retire or stop working soon, you need to consider how it will affect your lifestyle and future plans. Additionally, if you both have different aspirations for retirement, it’s important to discuss how you can compromise and find activities that you can enjoy together.

About Financial Management

When discussing retirement, it’s important to consider when you plan to retire and whether you can afford to stop receiving a paycheck. If you are unsure, meeting with a financial planner can help ensure your finances are in order. Additionally, you should consider whether there will be a period of time when both of you will be retired or not working, and whether you will have enough money from other sources to support your lifestyle during this time.

Another important topic to discuss is when you plan to withdraw the required minimum distributions from your retirement accounts. A financial advisor can help you determine the best strategy given your current account balances and your desires for the future. Finally, if there is a significant age difference between you and your spouse, it’s important to discuss whether the younger spouse is anticipating using the retirement funds from the older spouse for their lifetime as well, and whether there will be enough money to support both of you.

About Estate Planning

Creating an estate plan is important because it ensures that your loved ones are taken care of when you die. Without an estate plan, your state’s laws will determine how your money and property will be distributed, and who will make decisions for you if you are unable to make them for yourself. When reviewing or creating your estate plan, there are several important things to consider.

Firstly, you need to decide who will serve as your trusted decision-makers, such as your executor, successor trustee, agent under a financial power of attorney, and agent under a medical power of attorney. Because of the age difference between you and your spouse, it is advisable to name alternates to these positions in case your first choice is unable to act on your behalf. If you have children from a previous relationship, you should also consider if and in what order you want to name them to one of these important decision-making roles.

Secondly, you need to decide who you want to receive your property and money after you die. If your spouse is your beneficiary, you need to consider whether you want them to receive the inheritance outright or in trust. If you plan to leave an inheritance to your children, you need to decide whether they will receive it immediately after your death or after your surviving spouse’s death.

Lastly, if you have children from your current marriage and previous relationships, you need to consider if you want them to be treated the same when it comes to inheritance or if you want to give preferential treatment to one group. These are some of the important issues to think about when creating your estate plan.

Typically, when one parent stays at home to take care of the children and household, they are responsible for several tasks such as taking care of the kids, cleaning the home, driving family members to events, cooking meals, shopping for the family, and managing household tasks like scheduling appointments and planning events.

While these tasks may not be valued as much as paid work, they are still important and require a lot of time and effort. If the stay-at-home parent were to become unable to perform these tasks, it would be difficult for the other working parent to do it all themselves without sacrificing their job or free time.

A Comprehensive Plan to Secure Your Family’s Future

To protect your family and finances, it is important to plan ahead in case an unexpected event happens. It is important to have a team working with you when planning.

Start by figuring out how much it would cost to replace the stay-at-home parent’s work if they were no longer able to do it. A financial advisor can help you with this and guide you on making contributions to retirement accounts.

Next, it’s important to meet with an insurance agent to determine the right amount and type of insurance you need, both for life and in case the stay-at-home parent becomes disabled or incapacitated.

Then, your certified public accountant or tax preparer can help you make sure you’re claiming the right credits and deductions and maximizing your family’s single income on your annual tax returns. By working with this team, you can create a comprehensive financial and estate plan that protects your family’s future.

A properly drafted estate plan can ensure that your money and property are protected and used in a way that matches your ultimate wishes.

Protecting Your Proceeds from Creditors and Predators

Our goal is to protect families like yours, and one way we do this is by ensuring that your life insurance benefits are safeguarded from creditors and others who might seek to take advantage of your beneficiaries. To achieve this, we recommend naming a trust as the beneficiary of your life insurance policy.

There are two types of trusts that can help protect these benefits:

1. Revocable living trust

A type of trust that you can create while you are alive, and you can change it until you pass away or become unable to manage your affairs. Usually, you are the person in charge of managing the money and property in the trust, and you can use it during your lifetime. If you become unable to manage your finances, someone else that you chose beforehand can manage the trust for you.

If you have accounts and property that are valued below the current lifetime estate tax exemption amount or if you have already created a trust, naming a revocable living trust as the beneficiary of a life insurance policy can be a good option. When you name the trust as the beneficiary, the life insurance policy’s death benefit will go to the trust after you pass away. The trustee will then use the money according to the instructions in the trust agreement, which we can help you create to better protect the money from any undesirable people, such as creditors or divorcing spouses of your beneficiaries.

2. Irrevocable life insurance trust

A way to protect your life insurance policy from estate tax and ensure the money goes to your beneficiaries according to your wishes. You can create this trust by transferring ownership of an existing policy to the trust or by having the trust purchase a new policy. You make cash gifts to the trust each year to pay the insurance premiums.

When you pass away, the trust receives the death benefit, and the trustee distributes the money according to the instructions in the trust document. This strategy is helpful for people who have assets valued close to or above the current lifetime estate tax exemption amount. By using this strategy, you can remove the value of the life insurance policy and death benefit from your taxable estate, which can save your loved ones money on estate tax.

We are passionate about safeguarding families and would be happy to assist you in protecting your own. Give us a call to schedule an appointment or schedule a meeting with us below.

A resume is a document that shows employers what experience, skills, and education you have, and how you might perform in a job. If you haven’t updated your resume in years, it might not accurately show your abilities. Similarly, estate plans need to be updated regularly to reflect changes in your life and the law. If you don’t update your estate plan, it might not work the way you want it to. So, just like with resumes, outdated estate plans won’t be very helpful.

Take a Moment to Reflect

Take a moment to think about all the things that have happened in your life since you last signed your will, trust agreement, and other estate planning documents. Have there been any changes that could impact you, your helpers, or your beneficiaries? If so, then your estate plan might need to be updated to account for those changes.

Here are some examples of significant changes that would require an estate plan review and possible updates:

• A new family member that you want to provide for in your estate plan
• You, a trusted decision maker, or a beneficiary got married or divorced
• A loved one passed away or is now disabled
• You or a loved one is now suffering some health challenges
• Your trusted decision makers is now incapacitated
• Your financial status has changed either for better or worse
• You, a trusted decision maker, or a beneficiary moved to a new state

Don’t Procrastinate on Estate Planning

Most people tend to put estate planning at the bottom of their to-do list and forget about it once it’s done. However, estate planning is not a one-time task, it requires ongoing attention and review. It’s important to take the time to review your estate plan regularly, just like you would update your resume or meet with your doctor or financial advisor. By doing this, you can make sure that your estate plan is up-to-date and reflects your current needs and the needs of your loved ones.

To make sure that you actually follow through with this, you should schedule an appointment with us to review your estate plan. This way, it will be on your calendar and you won’t forget about it.

Updating your estate plan is the best way to make sure it will accomplish exactly what you want it to do.

If your life or the law has changed since you created your will or trust agreement, it’s important to update it. You can update a revocable living trust by either creating an amendment or by restating the entire trust agreement. An amendment changes a specific part of the trust, while a restatement creates a new set of instructions for the entire trust.

Although you might assume that an amendment is cheaper than a restatement, that’s not always the case. If you have a will, you can make small changes or updates by creating a codicil. Alternatively, you can create a new will with updated instructions.

Make the Small Changes or Start Over with a New Document?

Think of your estate plan as a recipe card that you’ve been using for years. If you’ve made a few small changes, it’s still easy to read and follow. But if you’ve made lots of changes, it might be confusing or hard to understand. Just like with a recipe, if your instructions aren’t clear, things might not turn out the way you want them to.

That’s why it’s important to be careful when making changes to your will or revocable living trust. If you’ve made too many changes, it might be better to start over with a new document to make sure your wishes are clear and easy to follow.

There isn’t a clear rule about whether you should use a small change document like a codicil or amendment, or a big change document like a new will or trust restatement when making changes to your estate plan. It really depends on the specific changes you need to make and how extensive they are. A general guideline is that anytime you are making more than two changes, creating a new will or restatement is probably better because of the following reason:

• Fosters ease of understanding and administration;
• Tends to avoid ambiguity;
• Reduces the amount of paperwork to retain and provide to financial institutions or parties;
• Decreases the risk of misplacement;
• Prevents beneficiaries from discovering prior terms; and
• Provides an opportunity to include other relevant updates, such as changes in the law.

We can help

If you’re thinking about making changes to your will or trust, it’s important to consider whether any previous changes might have unintentionally changed what you wanted or made it harder to manage your will or trust.

We can help you make sure your instructions are clear and easy to understand. If you have any questions, don’t worry, we can answer them for you. No matter what your situation is, we can help you figure out the best way to update your will or trust.

Life is unpredictable and certain events can have a significant impact on your estate plan. It’s a misconception that once you’ve created your estate plan, you can just forget about it. It’s important to consider how common life changes can affect your existing estate plan.

Birth of a Child or Grandchild

Many parents create their estate plan after their first child is born. But if their plan only includes their first child, the second child might not get their fair share without going to court. That’s why it’s important for parents to update their estate plan after each subsequent child is born.

Similarly, if a grandchild is not included in the grandparents’ estate plan, they may not be able to receive any of the benefits or opportunities that the grandparents wanted them to have. This could happen because of the family’s structure or how the estate plan was written.

Death of a Family Member

When creating a will or trust, different people play different roles: the person making the document (will or trust maker), the people who will receive something from it (beneficiaries), and the people responsible for making sure the instructions are followed (executor, trustee).

If any of these people pass away, it can impact the estate plan. For example, if a beneficiary dies, their share may go to someone else or their own descendants. It’s important to review your estate plan to ensure your wishes are still carried out.

It is also important to have backup people in place in case the person you named as the personal representative, executor, or successor trustee is unable to carry out their duties (even if it’s due to passing away before you). If you didn’t name any backups, then your loved ones may have to choose someone to take over, or a judge may have to decide who should be appointed. This could be especially difficult for families who tend to have conflicts.

Purchasing a New Home

If you have a trust-based estate plan, it’s important to make sure that all of your property and accounts are owned by the trust or named as a beneficiary. When you buy a new home, you need to remember to transfer it into the trust to avoid probate.

When you buy real estate, the title company may assume that you are buying it as an individual or as a married couple, so you need to tell them that you want to buy it in the trust’s name. If you forget to do this, you will need to contact your estate planning attorney to transfer the property into the trust after a successful transaction.

If you don’t put your property into your trust, then after you pass away, it will either go to the person who co-owns it with you (if you co-own it in a certain way), or it will have to go through a court process called probate if you owned it individually or as a tenant-in-common.

Marriage or Divorce

Getting married is an exciting time, but it can also be complicated, especially when it comes to money and property. You and your spouse may own separate property, as well as property that you accumulate together during your marriage. To avoid confusion and ensure that your wishes are carried out, it’s important to have an estate plan that outlines what property is separate and what is joint, what you want to leave to your spouse, and who should make decisions for you if you are unable to do so. If you don’t update your estate plan after getting married, a court may have to get involved to determine how your property should be distributed and who should make decisions for you.

If you get divorced, though, your wishes may change. To avoid any confusion, it’s important to update your estate planning documents after your divorce is finalized. This will ensure that your former spouse is not involved in your estate plan, even if they were previously named as a decision maker or beneficiary. It’s best to work with an estate planning attorney to update your documents and choose new decision makers and beneficiaries.