Creating an Estate Plan

“Creating An Estate Plan” sounds like a daunting task, but it doesn’t have to be difficult.  Establishing a helps provide you security for your lifetime, and a sense of peace that you have planned well for the administration and distribution of the worldly goods that you leave behind.       

    

You might be surprised to hear that only a small percentage of the population actually take the time to make a will. Studies show that less than half of US citizens have a will.   We each have the right to set forth how our assets will be distributed upon our death, and it’s important that we exercise this right.  When we don’t have a will the state writes one for us, which basically means that the laws, not our desires, will govern the disposition of our estate.

 

For people with children, the focus of an estate plan is generally on providing for their children.  For people who don’t have children, the focus may be on providing for other family members.   This is important and biblical because God loves the family.  It is possible to establish a plan that will not only provide the financial security for our family, but also reinforce to them our beliefs by also providing for the Lord's work in our plan.

    

In addition to many joyful stories of how people have set up estate plans, there are also stories of conflict.  The need to divide money and property can escalate animosity and create conflict in many situations.  There have been numerous situations where brothers and sisters fought over the properties that their parents worked so hard to acquire.  

 

Planning your estate creates a unique opportunity.   Rather than not having a plan, which may lead to litigation, you can establish a plan that also witnesses to the beneficiaries your love of God.

 

REVERSIBLE LIVING TRUST

You may have heard of, or you may have what is commonly called a “revocable living trust.”  This type of trust is referred to as a “living” trust because it takes effect during a person’s lifetime.   The most common situation is where the person who establishes the trust serves as “Trustee” and “Beneficiary” during their lifetime.  That person will manage the trust as trustee and receive the benefits of the trust while he is alive.  In the event that the person becomes incapacitated during their lifetime, the trust instrument states who would serve as successor trustee.   

 

The living trust can act as a “will substitute” in that it can set forth the beneficiaries.  The successor trustee of the living trust could manage and distribute the remaining assets in the trust to the designated beneficiaries WITHOUT having to go to court to probate the will.   For this reason, living trusts have become popular in Hawaii because people would like to avoid the expenses, delays, and publicity that are associated with the probate process.  The trust is a very flexible vehicle and can provide for multiple beneficiaries at different time periods.  

 

CHARITABLE REMAINDER TRUST

You might be interested in initially providing for yourself, your spouse, and your children, but thereafter provide for a charity.  This result can be accomplished in the living trust, but it can also be done through a Charitable Remainder Trust. This trust is referred to as a Charitable REMAINDER Trust, because the non-charitable beneficiaries, say children, receive a regular distribution for a designated period, which can consist of both income and principal, and  the charity receives whatever is remaining in the trust after all payments to the beneficiaries. Because charities enjoy favorable tax treatment, Charitable Remainder Trusts can be a powerful tax vehicle.  By effectively using the income tax deductions and avoiding capital gains taxes, the plan can result in a significant gift to charity without reducing the amount being left to the beneficiaries.  For that reason, many refer to Charitable Remainder Trusts as win-win vehicles because the goal of providing for family and the goal of providing for a charity can both be met.

 

There are many other estate planning vehicles, providing Reversible Living Trusts and Charitable Remainder Trusts, that an experienced practitioner can assist you with. Establishing an estate plan that meets your goals is a privilege and can be a blessing to you and others. The Hawaii Baptist Foundation encourages you to establish an estate plan and put it down in writing.  

 

You should prepare and properly document an estate plan:

1.     So you can decide who will be the guardian of minor children should you die before they are 18.

2.     So you can decide who will administer your trust or estate.

3.     So you can decide when and how your heirs will receive their inheritance.

4.     So you can decide whether to include your Christian testimony.

5.     So you can decide whether to include a gift to ministry.

6.     So you can take the necessary steps to minimize the arguments and bad feelings among your children after you are gone.

 

The Foundation would welcome the opportunity to help you formulate your goals and estate plan.   

 

Additional information on creating an estate plan is available at Planning for The Future at http://www.mylegacyoffaith.org

© 2018 Hawaii Baptist Foundation