THE ULTIMATE ESTATE
PLANNING GUIDE

360 FINANCIAL’S ESTATE PLANNING SERVICES

Our Estate Planning Services Include:

  • Will and trust planning
  • Tax and income tax strategy
  • Updating significant life changes (marriage, death, divorce)
  • Beneficiary designations and contingent beneficiary
  • Insurance plan and retirement fund distributions
  • Disability/Long-term care

Organization and Review:

  • Personal Wills
  • Healthcare Representatives
  • Financial Power of Attorney
  • Medical Power of Attorney
  • Joint meetings with your attorney

Document Organization:

  • Birth certificates
  • Social security cards
  • Marriage, divorce, and death certificates
  • Beneficiary designations and contingent beneficiary
  • Titles to property, etc.

Digital Assets Location Checklist:

  • Social media accounts
  • Emails
  • Digital files
  • Online access websites, etc.

WHAT IS ESTATE PLANNING?

Estate planning is the process of planning for the transfer of your assets to your heirs after you die.

At 360 Financial, we believe estate planning plays an essential role in any good wealth management plan. Through the estate planning process, legal documents such as healthcare directives, wills and trusts are created to make provisions for carrying out your wishes. Although your 360 Financial wealth management advisors can’t provide legal advice, we can connect you with qualified estate planning legal professionals and work closely with them to ensure your estate plan aligns with your big picture wealth plan.

WRITING A WILL AND BEYOND

A written will is a key initial step in estate planning.

It is one of many essential legal documents needed to help ensure your wishes are carried out after your death. A will can also help avoid probate headaches and streamline the transfer of your assets to your beneficiaries. But there’s more to estate planning than merely writing a will.

Estate planning can also provide for your long-term care needs, protect your assets from creditors and lawsuits, and create trusts that benefit your family by limiting tax exposure. Collaborating closely with a qualified estate planning attorney, your 360 Financial wealth management team can develop a comprehensive estate plan that ensures your legacy is carried out according to your wishes.

ESTATE PLANNING STEPS

Some of the main steps involved in estate planning include:

  • DRAFTING A WILL. In a written will, you can designate the beneficiaries who will inherit your property and assets after you die. You can also name an executor to ensure your will is carried out according to your wishes.
  • POWER OF ATTORNEY. Designating a power of attorney lets you appoint someone to act on your legal behalf if you become incapacitated.
  • SETTING UP TRUSTS. Trusts can help protect your assets from lawsuits and creditors and reduce their exposure to taxes when your beneficiaries inherit them.
  • ACCOUNT FOR YOUR FAMILY’S NEEDS. Your 360 Financial wealth manager can recommend life and health insurance products as well as investment solutions to ensure your family is taken care of if you die.
  • LONG-TERM CARE. If you become incapacitated and need specialized services such as memory care, a long-term care plan can help mitigate the cost and financial burden of care for your family.

Avoiding Probate Pain

The easiest way to avoid probate pain is to plan ahead and take the necessary estate planning steps to ensure it’s a smooth and timely process. All estates go through probate. When the proper legal documents are in place that clearly state your wishes, the process can be relatively smooth. Without these documents, the state takes over the role of distributing your estate, which can be costly and time-consuming.

HERE ARE A FEW KEY STEPS YOU CAN TAKE TO AVOID PROBATE HEADACHES:

  • Create a will and/or trust that appoints an executor of your estate and states who your assets should go to.
  • Title property jointly so it passes to the other owner, avoiding probate.
  • Title accounts TOD (transfer on death) so they automatically transfer to the named beneficiary and avoid probate.
  • Give your assets to your loved ones while you’re still alive. This can include gifting strategies that will lower the tax liability of your estate before you die.

Appointing the Right Executor

Appointing the right executor for your estate is vitally important. Ideally, an executor is someone you trust and have known for a long time. Often, it’s a family member or close friend.

It should be someone who’s responsible, fair, and can leave their own personal opinions and emotions out of the equation to make sure your wishes are carried out. Remember that if you don’t appoint an executor, one will be appointed for you by the state, costing time — and money that will be paid by your estate.

Appointing the right executor for your estate is vitally important. Ideally, an executor is someone you trust and have known for a long time. Often, it’s a family member or close friend. It should be someone who is responsible, fair, and can leave their own personal opinions and emotions out of the equation to make sure your wishes are carried out.

Planning for Estate Taxes

The government gets plenty of your money while you’re alive. Proper planning for estate taxes can help make sure they get less of it after you’re gone. A qualified estate planning attorney can structure your estate plan in ways that reduce your beneficiaries’ tax liability. The amount of tax your heirs will owe is based on the value of your estate after any outstanding debts and taxes are paid. Estate taxes differ from state to state, but estates valued at less than $12.92 million in 2023 are exempt from federal estate taxes.

ESTATE PLANNING AND TRUSTS

The more your estate is worth, the more it makes sense to consider various types of trusts. Trusts can address several estate planning challenges. They can protect and preserve your assets. They can reduce tax liability for your beneficiaries. And they can be structured in ways that solve for complex family dynamics. Because almost any type of asset can be placed into a trust, they’re a helpful way to manage and consolidate your estate.

Benefits of a Revocable Living Trust

There are several benefits to a revocable living trust. The most important is control. This type of trust gives you control over how your assets will be distributed. For example, if a beneficiary is younger, it allows you to add clauses that delay the distribution of an inheritance until the recipient reaches a certain age. It can be changed and updated at any time while you’re still alive, which is helpful when life circumstances change, such as in the case of divorce. Another benefit is simplicity. Investing a little time and money now to set up a trust with your estate attorney can save your family the hassle and expense of probate after you die. Revocable trusts are highly customizable and can be creatively tailored in ways that address complex family dynamics while reducing your family’s exposure to inheritance tax.

What is wealth management and how does it work?

Schedule a 15-Minute Call

USING LIFE INSURANCE IN YOUR ESTATE PLANNING

Using life insurance in your estate planning is a great example of how wealth management and estate planning can work in tandem to ensure your long-term goals are met. The death benefit on your life insurance policy can help your heirs cover your funeral expenses and pay any outstanding debts and taxes, which become your estate’s responsibility when you die. Additionally, since death benefits aren’t subject to taxes, your heirs can use that money to cover any inheritance taxes they might incur. This can be especially helpful when much of an estate’s value is in non-liquid assets that the family would rather not have to sell to cover taxes, such as real estate.

HOW TO CREATE YOUR ESTATE PLANNING SNAPSHOT

Creating a snapshot inventory of your assets is one of the first steps you should take in estate planning.

It starts with making a list of all your assets. First, include tangible assets like your home, vehicles, boats, any land you own and any valuable personal possessions such as collectible art or jewelry. Then list your intangible assets like your bank accounts, retirement accounts, stocks and bonds, life insurance policies and any businesses you have ownership in.

Important Estate Planning Documents

Once you’ve created an inventory of your assets, the next step is to work with an estate planning attorney to create a series of important estate planning documents that make legal provisions for how you would like your assets to be distributed after you die. These typically include wills and/or trusts, power of attorney and a healthcare directive that states your wishes for medical care if you become incapacitated. Within these documents, you can also make other important provisions like naming your beneficiaries, appointing an executor for your estate and a guardianship designation if you have younger kids.

Estate Planning in Your State

Although the basic principles are the same in every state, each state has different laws and rules governing taxes, probate and other aspects of estate planning. Working with an estate planner who understands the nuances of estate planning in your state can help minimize your estate’s exposure to taxes and ensure your wishes are carried out after you die.

Pulling Your Estate Planning Team Together

When putting your estate planning team together, it’s important to think holistically and keep your big picture wealth goals in mind. Some of the key people an estate planning team should include are:

  • ESTATE PLANNING ATTORNEY: Estate planning attorneys help you understand tax laws, explain the legal complexities of estate planning, and create the legal documents that express your wishes after you die.
  • TAX SPECIALIST: A tax specialists such as a CPA can help you understand how much tax liability your heirs will have when they inherit your assets. This can help you proactively plan and take steps to minimize their tax burden.
  • INSURANCE AGENT: Life insurance can play a key role in your estate plan. If you pass away suddenly, your tax-free death benefit can help offset the taxes your heirs might owe after inheriting your estate.
  • FINANCIAL ADVISOR: Your financial advisor is the quarterback of this team. You’ve got big picture plans and goals for your life and your investments and other assets are the conduit to it all. Perhaps a better way to think about it that your estate planning team is part of your overall wealth management team.

ESTATE PLANNING IN MINNESOTA

Your 360 Financial team understands the nuances of estate planning in Minnesota. Minnesota has a $3 million estate exemption before your estate is taxable at the state level. This exemption amount is not portable between spouses.

Additionally, Minnesota does not have a gift law, which means you can gift an unlimited amount of assets, unlike at the federal level. However, there is a three-year lookback rule for lifetime gifts, which means you can’t just gift all your assets on your deathbed because these assets would be treated as if you still owned them. You should also know that gifted assets maintain their cost basis and do not receive the “step-up” in basis upon death.

For example, if you gift a $400,000 family cabin that you purchased for $100,000 in 1990, there would be a $300,000 taxable gain when sold. Alternatively, passing this same cabin upon death would qualify it for a step-up in basis, so the receiving party would only have taxable gains upon sale if the value of the property were higher than the value on the day of death ($400,000 in this example).

Schedule a 15-minute Call

If you’re ready to enhance your financial well-being with the help of a passionate team of experienced
experts, schedule a free 15-minute call with us to discuss your goals and dreams.

Schedule a 15-Minute Call

COMMON ESTATE PLANNING QUESTIONS

What are the basics of estate planning?

The basics of estate planning involve taking steps to create a holistic plan that provides for the distribution of your property and assets
to your heirs after you die. These steps usually include writing a will, naming your beneficiaries, designating an executor for your estate, doing tax-planning and setting up trusts.

What are some examples of estate planning?

One example of estate planning is creating a will that names your beneficiaries and designates someone to be the executor of your estate. A will can also include a guardianship designation if you have younger children. Another example of estate planning is changing your financial accounts to TOD (transfer on death) and retitling property to include your beneficiaries as co-owners. This helps prevent the assets and property from going through probate when you die, which can be time-consuming and expensive for your heirs.

What are the four important estate planning factors?

  1. A will. A will is the document that states how you want your estate distributed when you die. It also names an executor to ensure your wishes are carried out.
  2. Beneficiaries. Beneficiary designations state who you want to inherit your property and assets.
  3. Power of attorney. A power of attorney appoints someone to act on your legal behalf if you become incapacitated. You can name separate medical and financial powers of attorney.
  4. Trusts. Trusts can help shield your assets from lawsuits and creditors and reduce their exposure to taxes upon inheritance.

What is the main purpose of estate planning?

The main purpose of estate planning is to ensure that your final wishes are properly carried out after you die.

What are the four must-have documents?

The four must-have estate planning documents are: a will, a revocable trust, financial power of attorney and healthcare power of
attorney.

What should be in a death folder?

A death folder should contain all the important documents and information your loved ones need to initiate the administrative
aspects of settling your estate. This should include:

  • Your will
  • Trusts
  • Power of attorney documents
  • Bank, investment and retirement account information
  • Credit cards, loan documents and other financial information.
  • Life insurance policies
  • A list of assets and debts
  • Titles to property
  • Important contact information (lawyers, financial advisors, etc.)
  • Information on any businesses you have ownership in
  • Birth certificate and marriage certificate

What happens to a house when the owner dies without a will?

Although specific laws vary from state to state, when a homeowner dies without a will, the state puts the home into probate. In probate, the home is eventually transferred to the deceased person’s closest living relatives. If there are disputes among relatives, the process can be time-consuming and costly. In some cases, the heirs may be forced to sell the property to cover probate expenses and taxes.

How often should I review my beneficiaries?

We recommend our clients’ review their beneficiaries every few years or when major life events occur, such as marriage, divorce, death in the family, birth or adoption.

Can I do my estate planning alone?

The estate planning process is complex. Doing it alone puts you at risk of making errors that could cost you and your family time, money and frustration down the road. To ensure a thorough and well-considered estate plan, its best to work with a qualified professional that can align your estate planning with your overall wealth goals.

Schedule a 15-minute Call

360 Financial is we’re here to help with your estate planning and other wealth management needs.
Schedule a free 15-minute call with our experienced team of experts to discuss your financial ambitions.

Schedule a 15-Minute Call
Weekly Market Commentary
July 5, 2022

After a brief lull in 2023, buyback activity appears to be back this year. A resilient U.S. economy, easing inflation pressures, and expectations for an eventual shift to interest rate cuts have given corporate America confidence to boost authorized share repurchases

READ MORE >
WEBINAR: 2024 Outlook: A Turning Point
December 26, 2023

Mike Rogers and the 360 team uncover research on the economy, stocks, bonds, and policy through LPL Research’s economic and market forecasts for 2024.

READ MORE >
What Are Three Main Elements That Affect Overall Financial Planning?
December 8, 2023

Asset allocation, tax planning, and estate planning are three main elements that affect overall financial planning. In this post we’ll cover all three in brief, so you can make sure that you’re ready for your work-optional future!

READ MORE >