If the amount of money is substantial enough to justify the costs I suggest going with trusts, including a trust to hold the insurance policies. There are many benefits:
- The proceeds of the insurance are out of your estate and thus not subject to estate tax.
- The trust assets are protected from your creditors.
- The trust assets are protected from the beneficiaries' creditors.
- The trust assets are protected from the beneficiaries' spouses.
- Maximize and leverage estate taxes exemptions (Unified Gift Exemption, and Generation Skipping Tax Exemption).
- Can be used to create sub-trusts at certain milestones or other qualifying events (Exempt and Non-Exempt Marital and Descendant Trusts, Family Trusts, etc..
I can't think of any reason that you should own your own life insurance, unless your gross estate including the life insurance are under the current floor for estate tax, and/or you want to retain ownership of the cash value and power to designate beneficiaries.
An alternative to trusts that have many of the same benefits are Family Limited Partnerships, which also provide a means for you to transfer assets to your heirs while retaining some degree of control and, most importantly, protection from creditors.
However, these are not DIY options, in my opinion. If the estate value is substantial enough to protect, then it is substantial enough to hire a qualified, Board Certified estate planning attorney to create the necessary instruments. You also have to jump through some hoops, dotting i's and crossing tee's, partitioning assests for grantor's gifts to the trusts, notifying children of certain rights when they turn 18 and when when grandchildren are born, filing gift tax returns to document your uses of the unified exemption and GST exemptions, etc. The documents and instructions are all part of a customized package provided by the attorney, but it's up to the individual to make sure everything is executed.
in re important documents: Scan them, burn the images to a CD, and store a copy of the CD(s) in a secure place off-site. That could include copies of your organizer(s) and pictures of your property, etc. It's easy to update periodically.
I think this was mentioned earlier, but your will should NOT be in a bank lockbox unless someone else has unfettered access to it after your death. |
