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Estate planning is essential. The Bible says that our legacy on Earth is built by the things we do to advance the Kingdom of God and is the only thing that has lasting value. For example, in Matthew 6:20, Jesus tells his followers to “store up for yourselves treasures in heaven, where neither moth nor rust consumes and where thieves do not break in and steal.” How do we accomplish that and in what ways can we ensure our legacy demonstrates our love for God and others?
Estate planning is one of the ways we can impact God’s Kingdom. It is the process used to transfer your life’s assets and possessions from one person to another. Doing it carefully and properly helps ensure your wishes are followed with a minimum of confusion and in a way that places key decisions in your hands, rather than in the hands of legal or government agencies.
While this planning process can seem overwhelming, it doesn’t have to be. There are people and processes to help you through estate planning, and it is wise to make use of the advice of an attorney or a financial adviser.
Cross Catholic Outreach is happy to help you plan a legacy of eternal value. Here are a few frequently asked questions about estate planning that I answer for my clients, as an attorney at Nelson Comis Kettle & Kinney LLP.
A will is a legal document that details how an individual’s assets should be distributed after death. It allows the individual to name an executor to manage their estate and distribute assets to their beneficiaries. A will only take effect upon the individual’s death and must go through a court process called probate. During probate, the court oversees the distribution of assets and ensures that the will is valid.
On the other hand, a trust is a legal entity that holds assets for named beneficiaries. Unlike a will, a trust can take effect during the individual’s lifetime and continue after death. To determine what is best for you, consult with an estate planning attorney.
A revocable trust is an estate planning tool that allows for property management during your lifetime and provides a way to distribute assets upon your death. It is revocable by the person creating the trust, referred to as a settlor or grantor.
Unless the trust terms specifically state that the trust is irrevocable, it will be a revocable trust. Now, the issue with an irrevocable trust is that when you fund those assets into the trust, you basically have gifted those assets away, and that creates gift and other tax consequences.
For basic estate planning, we do revocable trusts because we want the settlor to be able to revoke the trust and make changes to it as things occur and change during their lifetime.
There are no time limitations to close a trust. By the terms of the trust, it can continue for years. At some point, all the assets do need to be distributed. And if the trustee is unnecessarily delaying or withholding distribution, that’s when you can resort to the court and either force a trustee to be removed or replace them with someone who’s actually going to administer the trust. With an estate, on the other hand, the courts like to see the estate closed within a year, and if you can’t close within a year, you have to file a report with the court explaining why the estate could not be closed.
For federal purposes, there are no estate taxes for assets less than the $12,920,000 threshold. But if you inherit an IRA or an annuity, those assets have deferred income, so they are distributed out of that vehicle. The deferred income is taxable income to the beneficiary.
States differ in whether they levy inheritance or estate taxes upon the death of the benefactor.
We recommend using either an in-home fireproof safe or a safety deposit box. Make sure that the successor trustees also have a copy of the will and the trust documents. Be sure to tell them where you keep your estate planning documents. Put it somewhere safe, but don’t forget where it is!
You can learn much more about estate planning and leaving a legacy of love by contacting Cross Catholic Outreach. Our team will happily answer your questions with no obligation on your part, or you can request a free Estate Planning Guide. Get more information, request a guide to arrange a conversation with one of our staff members by filling out the form below:
Please note that estate planning and other gifting information or proposals may be offered to or discussed with Cross Catholic Outreach donors. Such discussions and any other written, verbal, electronic or other communications with Cross Catholic Outreach’s Gift Planning staff or other representatives relating to any gifting are not intended as, nor should they be construed to be, legal, tax, estate planning and/or financial advice or counsel and are offered for illustrative purposes only. Current and prospective donors are encouraged to seek legal, tax, estate planning and/or financial counsel from their professional advisors prior to making any planned gift.