If you have a moderate or large estate, you may find it desirable to create a living trust. The living trust is completely within your control during your lifetime. You can add property to the trust or remove property from the trust at any time. During your lifetime, the trust income is taxable to you.
There are at least three major benefits of the living trust. If you are sick or in the hospital, your designated successor trustee can take over and manage your property for your benefit. Second, if you pass away, the property in the living trust will avoid probate and potentially save thousands of dollars in costs. Third, the living trust typically is a private document and is not made public during the probate process.
Custom Estate Plan for Business, Investments or Special Needs Child
If you own a family business, substantial real estate holdings or a large estate, then a custom plan that considers your special property goals and requirements should be created. Another custom plan option is important if you have a child with special needs. A child with special needs may be provided for through a “special needs trust.” A special needs trust will facilitate care of the child by providing resources and directions. In some cases, a child may qualify to receive federal or state benefits if that is helpful in providing care for the special needs child.
IRA, 401(k) or Other Retirement Plan
Your IRA, 401(k) or other retirement plan is transferred by a beneficiary designation. Normally, the beneficiaries should be named on the IRA, and it should be given directly to family or charity, and not to your estate. The IRA or 401(k) custodian should provide a form for you to select a primary and contingent beneficiary. Because your retirement plan may represent a major portion of your property (30% to 70%), your beneficiary designation should be reviewed every two to four years.
Life insurance is usually permanent (whole life or universal life) or term. The insurance policy is a contract, and there is a beneficiary designation form. You will select the primary and contingent beneficiary to receive the death benefit if you pass away with a valid insurance policy.
Charitable Remainder Trusts
A charitable remainder trust is an excellent way to benefit yourself, your spouse or other family members. It combines substantial tax savings with the ability to produce a very good income for you or your family members. Charitable remainder trusts are especially helpful for individuals who retire and would like to sell land or stock tax free and receive a generous income.
Charitable Gift Annuity
Many of our friends, especially those age 70 and above, are very interested in fixed payments from a charitable gift annuity. If you fund a gift annuity, you receive a substantial income tax charitable deduction and fixed payments for life. A gift annuity may pay for one life or for two lives. For a husband and wife, the payments will last until both have passed away.
Donor Advised Funds
Many families find that a Donor Advised Fund (DAF) is a simple and efficient way to help charities that they love. By establishing such a fund, you can time the gifts you make (for investment or tax reasons) and you can select the charities you wish to benefit from your gifts. You receive the income or estate tax deduction, and the opportunity is there to make distribution decisions later. Many families may use a Donor Advised Fund as an estate beneficiary so that they can allow their children or friends to continue supervising the gifts from their fund for years to come. Parents appreciate the way that their DAF encourages children to be involved in philanthropy.
Another option that you may prefer is to leave property or money in an endowment form so that the charity does not spend the principal. Instead, the charity pays the endowment income (as the donors often have done throughout their lives). Endowments may be left to community or religious foundations or often directly to the charity with instructions for their use. It is often helpful to suggest a general purpose for the endowment fund because it will last perpetually, and the original purpose for the gift may one day not exist.
Louisiana Baptist Foundation is available to help you with estate planning. If you desire to include the Louisiana Baptist Children’s Home in your estate plans, the Louisiana Baptist Foundation offers estate planning assistance. As a ministry partner of the Children’s Home and an agency of the Louisiana Baptist Convention, the Foundation does not charge a fee for this service (legal and/or CPA fees may be incurred in some circumstances). You may contact the Foundation at 318.445.4495 or Toll-Free 877.523.4636 or www.LBFinfo.org.