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Key Questions to Discuss with Your Estate Planner

By Trilogy Financial

March 8, 2023

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Estate planning is an essential step to help protect the wealth that you've spent your life building. Meeting with an estate planner will help to create a comprehensive plan that will allow your assets to effectively pass to your assigned beneficiaries. Creating this initial plan can feel overwhelming, and we are here to help you prepare.

Here are five important questions you can expect to discuss with your estate advisor as you start to plan for your future.

How Would You Like Your Wealth to Pass to Your Heirs or Elsewhere?

The basis of your estate plan is where you want to direct your wealth and how you'd like that to happen. No matter how large or small your estate is, you'll need to decide how it should be distributed among children, grandchildren, other family members or favorite charity organizations. For example, this could mean leaving different parties a percentage of your total assets, or leaving one child your business and another child your vacation home.

It’s important to also think about whether you want your beneficiaries to receive their inheritance all at once or not. If you have a disabled child requiring lifelong care on your list, or someone who needs a little extra help managing their money, you may want a trust or annuity structure in place to pay out the inheritance in increments.

What Can Be Done to Prevent Costs and Conflicts for Your Heirs?

Costs for your beneficiaries are most likely to come up if your estate needs to go through probate, which is the process by which a court distributes your assets. In addition to financial costs, there are other reasons to avoid probate. Probate can be a long and exhausting process – meaning, your heirs will not be able to access your estate right away. If you have dependents who will rely on the money in your estate, this can be an especially serious concern. In addition, probate adds your estate information to the public record, which you may want to avoid. There are several strategies your financial advisor might recommend to avoid probate. These include placing assets in a trust and moving funds into joint accounts with your beneficiaries.

Conflict among heirs is another common concern, especially in families where conflict already exists. While the legal documents included in your estate should help minimize disagreements and make it more difficult for someone to contest your wishes, communication during your lifetime is important as well. Disagreements often surround specific items like jewelry or sentimental pieces rather than your financial assets. Labeling these items, writing a letter of instruction and starting to pass on these things during your lifetime can all help make your intentions clear.

How Can You Reduce Your Tax Burden?

After a lifetime of working to earn your money, you likely want to direct your wealth to your loved ones rather than the government. In 2023, only estates valued at $12.92 million (or $25.84 million for some married couples) or more may be subject to the federal estate tax. If, upon your death, the total value of your estate is less than the applicable exclusion amount, no federal estate taxes will be due.

Depending on the state you live in, your heirs or your estate might also be subject to state estate or inheritance taxes. If taxes are a concern for your estate, there are several ways to reduce your tax burden.

One simple option is to start passing money along during your lifetime. Based on the 2022 gift tax exemption limit, individuals can give up to $16,000 per recipient per year. This lets you give money directly to your children or grandchildren while reducing the value of your estate, which will reduce your tax bill. Other options include a marital trust, which allows one spouse to place assets in trust for the other spouse, and an irrevocable life insurance trust, which can pay for life insurance premiums with tax-deductible funds and then avoid estate taxes later on.

Are You Already Working with Financial Professionals?

If you're already working with an estate attorney, a financial planner or a tax professional, it's important for your estate planner to understand the strategies your existing financial team has recommended. You'll want to make sure that all of these members of your team are working together so you aren't paying for duplicated efforts or conflicting suggestions.

If you aren't already working with a financial team, your estate planner may recommend that you do so depending on the details of your estate plan. If you have complex tax concerns, you might need to talk to a tax expert. Depending on the type of trust that you wish to establish, you may need an estate attorney to set it up.

How Will Changes in Your Life Change Your Estate Plan?

Your estate plan should have the flexibility to adapt to changes in your lifestyle, family structure or life expectancy. Your initial plan will be based on your current circumstances, but you should consider potential future concerns and possible solutions.

Divorce and Remarriage

Divorce and remarriage are common life changes that can affect your estate plan. If you remarry, you may not want your new spouse to manage the inheritance of your children from the first marriage. This can create the need for a new trust to be established. In addition, if you have more children in later marriages, you will again need to update your estate plan.

Life Expectancy and Medical Issues

There are other lifestyle considerations that might change as well. For example, if based on your family history you expect to live into your 90s, you might not want to start giving away assets to avoid estate taxes. And if medical issues arise and your life expectancy changes, you will likely need to adjust your plan.

While you won't need to make any decisions based on hypotheticals, it's a good idea to discuss the possibilities.

How to Get Started?

Your estate plan is a key component of your Life Plan. To create an estate plan that addresses the above questions and any other concerns you may have, you'll need to start by finding the right estate advisor. Talk to the Trilogy Financial team to take control of your finances today while maximizing your future opportunities.

Download your free Estate Strategies eBook to learn how to protect your estate.

family happy after meeting with estate planner — family happy with estate planning and secure future

How Is Inflation Impacting Households Today?

Inflation is affecting families significantly, with prices of goods and services rising rapidly. One area where inflation has a noticeable impact is the cost of groceries. According to the U.S. Department of Agriculture, food prices have increased by 6% in the past year.

Inflation is also impacting the cost of housing. According to the National Association of Home Builders, lumber has increased by more than 167% since April 2020, making building, renting or renovating homes much more expensive.

Other areas where inflation impacts households include transportation, healthcare and energy costs. With gas prices rising, transportation costs are increasing making it more expensive for families to commute to work or travel.

Healthcare costs are also rising, with medical services and prescription drugs becoming more expensive daily. Additionally, the cost of energy, including electricity and natural gas, is increasing impacting household budgets.

How We Got Here and Why?

The United States has experienced an increase in inflation in recent years, fueled by a combination of factors, including:

Supply chain disruptions: The COVID-19 pandemic caused disruptions in supply chains, leading to shortages of goods and raw materials and higher consumer prices.

Government stimulus: The US government has implemented several rounds of stimulus packages in response to the pandemic, flooding the economy with cash and contributing to inflation.

Labor shortages: The pandemic also caused labor shortages in many industries, which has led to increased wages for workers and higher prices for consumers.

Rising energy costs: The cost of energy has increased, with higher prices for gasoline and other commodities, which has increased the cost of goods and services.

Monetary policy: The Federal Reserve has kept interest rates low to stimulate economic growth, contributing to inflation by making it cheaper for consumers and businesses to borrow money.

These factors have all contributed to the current state of inflation in the US. However, inflation is complex and multifaceted; many other factors are also at play.

7 Tips to Help Navigate Inflation

Inflation can be a challenging economic environment for households to navigate. Here are tips from our team of advisors at Trilogy Financial that can help you manage inflationary pressures.

1. Calculate Your Inflation Rate

This measure provides a more accurate reflection of the inflation you are experiencing compared to the general inflation rate reported in the media.

A financial advisor can help calculate your personal inflation rate by analyzing your spending habits and identifying the goods and services that make up your personal consumption basket. This process can involve reviewing bank and credit card statements, examining household bills, and discussing significant lifestyle or spending habits changes to help you track the prices of these items over time and calculate your inflation rate.

2. Create a Cash Management Strategy

A cash management strategy will allow you to preserve your purchasing power and financial stability. A financial advisor can help you create a strategy that aligns with your financial goals and risk tolerance by:

Assessing your current financial situation,
Identifying your short-term and long-term cash needs, and
Recommending appropriate investments that balance liquidity, yield, and risk.

The strategy can involve diversifying cash holdings across different asset classes, using inflation-indexed bonds or money market funds, and considering alternative investments that offer potential inflation protection.

3. Discuss When and How to Use TIPS to Protect Against Inflation

Treasury Inflation-Protected Securities (TIPS) are a type of U.S. government bond indexed to inflation. As inflation rises, the principal and interest payments of TIPS adjust accordingly, providing investors with a hedge against inflation. A financial advisor may recommend TIPS if you want to protect your portfolio against inflationary pressures or maintain your purchasing power over the long term. It could involve assessing your risk tolerance and investment objectives and recommending an appropriate allocation to TIPS within a diversified portfolio.

4. Discuss Alternative ‘Inflation-Hedging' Assets

In addition to TIPS, assets such as commodities, real estate and stocks of companies with pricing power can provide inflation protection. A financial advisor can help you choose the right assets for your portfolio by assessing your investment objectives, risk tolerance and time horizon. As a result, they can recommend an appropriate allocation to inflation-hedging assets that balance return and risk, like commodity funds, real estate investment trusts (REITs) or sector ETFs offering exposure to companies with pricing power.

5. Strategize for How to Avoid ‘Tax Bracket Creep' as Income Rises

Tax bracket creep pushes an individual's income into a higher tax bracket, resulting in a higher tax bill. This move can erode the purchasing power of your income and reduce your savings.

A financial advisor can help you strategize on how to avoid tax bracket creep by considering tax-efficient investment vehicles, such as Roth IRAs, tax-loss harvesting and charitable donations.

6. Review Homeowners and Other Insurance Solutions to Avoid Under Coverage

As the value of assets, goods and services increase due to inflation, the cost of replacing them also rises. A financial advisor can help you review your insurance coverage and ensure they have inflation protection from risks.

Advisors can also educate you on the different types of insurance available and their benefits, such as umbrella insurance, which can provide additional liability coverage in case of a significant lawsuit or accident.

7. Reassess Long-Term Inflation Assumptions for Retirement Projections

Inflation can significantly impact retirement savings and planning because it reduces the purchasing power of money over time. Individuals will need to save more to maintain their living standards in retirement.

A financial advisor can help you reassess your long-term inflation assumptions for retirement projections by analyzing your current savings and investment strategies, projecting future inflation rates, and identifying potential gaps in your retirement plans.

From Us to You: Control Your Financial Future

As inflation continues to affect households, you should take control of your financial situation and work with a financial advisor to develop a plan aligning with your goals, risk tolerance and personal situation.

Trilogy Financial is a financial advisory firm dedicated to helping clients navigate the complex world of personal finance. We offer comprehensive services, including financial planning, investment management, and retirement planning.

If you are concerned about the impact of inflation on your finances, contact us today to schedule a consultation with one of our experienced advisors. We are here to help you take control of your financial situation and navigate through the challenges of inflation.

Female financial advisor meeting with clients. — Female financial advisor meeting and discussing expert inflation protection tips with clients.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual 2. Investing involves risk, including possible loss of principal.

Life Insurance Advice

What Types of Insurance Are Critical for Your Financial Plan?

Windus Fernandez Brinkkord, AIF®, CEPA

January 8, 2019

Insurance is a necessary component to creating a financial plan that works well for you, your family, and your long-term goals. It can take just one illness, one job loss, or one car accident to turn your world upside down and crumble your financial plan.

If you have the proper insurance in place from the start, however, you can weather these life-changing moments and keep your goals and dreams on the right trajectory.

Auto Insurance – Auto insurance is a must and not just because the law requires that you carry it. Auto insurance can protect your assets in the case of an accident and make sure that not only can you shoulder liability in an accident but you can also get back on the road with a car that will carry you safely to and from work. Full coverage is especially important if you owe money on your vehicle. No one wants to keep making car payments on a vehicle that was totaled in an accident.
Homeowners or Renters Insurance – You have worked hard to provide for your family and homeowners and renters insurance can protect you and get you back to where you were in the case of a natural disaster or a home break-in. Depending on where you live, you have seen the damage that can be done by tornadoes, earthquakes, floods, and more. Be sure to check that your policy covers the weather most likely to wreak havoc in your neck of the woods.
Life Insurance – Life insurance is absolutely necessary for any individual who supports another individual. So, if you are married or you have dependents, then you definitely want to make sure that their needs are covered if you meet an untimely death. Think about what life would be like for your dependents without your income and choose the amount of life insurance that you need accordingly.
Health Insurance – Health insurance is such a smart choice. Medical costs have skyrocketed and long-term illness or serious injury can drain your savings fast. Having health insurance goes a long way in keeping your household doing well financially in the midst of a health crisis. If you do not receive health insurance through your employer, take the time to talk to your insurance agent about it.
Disability Insurance – If you work you may already be getting this type of insurance through your employer. Look at the specific plan and if you are not getting enough coverage through your workplace then you may want to consider getting some through your agent or broker.

Disability insurance is important because it keeps your household operating during a long absence from work due to illness or injury.

Now is the time to make sure all of your “insurance ducks” are in a row. Catastrophe may never hit, but if it does, you want to make sure that you and your family are covered.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.