Our Client resource center is designed to help you learn more about how Guardian Resources can assist you in protecting your legacy.
Take a few minutes to learn how each financial instrument can help in protecting the assets of your family.
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Download the file here.
Estate planning involves the will, trusts, beneficiary designations, powers of appointment, property ownership (joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety), gift, and powers of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. After widespread litigation and media coverage surrounding the Terri Schiavo case, virtually all estate planning attorneys now advise clients to also create a living will or health care directive. Specific final arrangements, such as whether to be buried or cremated, are also often part of the documents. More sophisticated estate plans may even cover deferring or decreasing estate taxes or winding up a business.
Many people (and even some attorneys) confuse a living will with a durable medical power of attorney. A living will sets out directives concerning end of life decisions, whereas a durable power of attorney gives all medical decision making authority to an appointed individual upon incapacity, including end of life decisions. Some people have both a living will and a health care power of attorney. Some, who wish to give complete discretion to a loved one, including end of life decision, have only a health care power of attorney.
What is a Will?
A will is a legal declaration by which a person, the testator, names one or more persons to manage their estate and provides for the transfer of their property at death. A will may also create a testamentary trust that is effective only after the death of the testator.
What is a Trust (Living Trust)?
In the United States, a living trust refers to a trust that may be revocable by the trust creator or settlor (known by the IRS as the Grantor). Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs (the probate courts, in some states, charge a fee based on a percentage net worth of the deceased), time, and maintain privacy (the probate records are available to the public, while distribution through a trust is private). A living trust can also be utilized to plan for unforeseen circumstances such as incapacity or disability, by giving discretionary powers to the trustee.
What is an Irrevocable Trust?
In contrast to a revocable trust, an irrevocable trust is one in which the terms of the trust cannot be amended or revised until the terms or purposes of the trust have been completed. Although in rare cases, a court may change the terms of the trust due to unexpected changes in circumstances that make the trust uneconomical or unwieldy to administer, under normal circumstances an irrevocable trust cannot be changed by the trustee or the beneficiaries of the trust.
What is an Annuity?
In the U.S. an annuity contract is created when an individual gives a life insurance company money which may grow on a tax-deferred basis and then can be distributed back to the owner in several ways. The defining characteristic of all annuity contracts is the option for a guaranteed distribution of income until the death of the person or persons named in the contract. Perhaps confusingly, the majority of modern annuity customers use annuities only to accumulate funds and to take lump-sum withdrawals without using the guaranteed-income-for-life feature.
What is an IRA (Individual Retirement Account)?
Traditional IRA – contributions are often tax-deductible (often simplified as “money is deposited before tax” or “contributions are made with pre-tax assets”), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income (except for those portions of the withdrawal corresponding to contributions that were not deducted). Depending upon the nature of the contribution, a traditional IRA may be referred to as a “deductible IRA” or a “non-deductible IRA.”
What is Probate?
Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under a valid will. A probate court decides the validity of a testator’s will. A probate proceeding interprets the instructions of the deceased, decides the executor as the personal representative of the estate, and adjudicates the interests of heirs and other parties who may have claims against the estate.
How do I avoid Probate?
Probate generally lasts several months, occasionally over a year before all the property is distributed, and may incur substantial court and attorney costs. One of the many ways to avoid probate is to execute a revocable living trust. A settlor, or a creator of a trust, transfers ownership of his real property from himself to a trust which he controls and can revise (except in the case of an irrevocable trust.) Upon death, the persons named as beneficiaries in the trust acquire ownership of the property of the trust. Since a probate is a public process, a revocable living trust shields private affairs of the deceased and the heirs from public scrutiny.
What is a Money Market Account?
A money market account is a deposit account with a relatively high rate of interest, and short notice (or no notice) required for withdrawals. In the United States, it is a style of instant access deposit subject to federal savings account regulations, such as a monthly transaction limit.
Do you have more questions?
Check out this website: The Office of Minnesota Attorney General Lori Swanson.