ASK TOM: HOW WILL ASSETS AND LIABILITIES AFFECT MY ESTATE PLANNING?
Debt is a scary word. No one likes it, but debt is a liability that can be turned into an asset. A few examples are: student loans that turn in to a degree with a higher paying job, or a house that you will own with the help of a loan. Anything that you own and/or have the title to is an asset for you and is a good idea to protect. By funding your trust with your assets you will eliminate a substantial amount of work and probate expense.
Many problems can be avoided by obtaining and writing down detailed information about your property, and either the physical location of the property itself or evidence of its existence. A detailed list should be made to provide specific identification and locations of all assets such as bank accounts, securities, and money market funds together with their tax basis, date of purchase, and present fair market value. Once you identify your assets, the next step is to transfer them into the right entity.
There are some assets that are not controlled by your estate planning documents. Some of these assets include: Individual Retirement Accounts (IRAs), life insurance, annuities, and payable on death accounts. These assets will automatically become the property of the designated beneficiary at the death of the owner and if there is not proper planning, these assets might not distribute as you intended and may work against the estate planning documents. The beneficiary of these assets needs to be confirmed to make sure that there is a proper beneficiary designation. If any proceeds of life insurance are needed to fund the estate or trust, the beneficiary of the life insurance policy must be payable to either the estate or the revocable trust.
Once the assets are identified and the correct information is gathered you must make sure that your assets work with your estate planning documents.
Liabilities should also be taken into consideration with the same information being gathered as with your assets. How much is owed, who is obligated to pay, and who it is owed to. Help your family settle your affairs in the easiest way possible.
JensenBayles, LLP provides a broad spectrum of legal services. Thomas J. Bayles has been actively providing advice in the areas of trusts, wills, probate and tax planning in the St. George market for over 20 years. Please visit our web site www.JensenBayles.com or call 435-674-9718 and ask for Thomas J. Bayles. The information in this article is for educational purposes only and is not intended to be construed as legal advice. Please contact an attorney for legal advice specific to your situation.