Trust Funding – Education is our Goal

At InSight Law, our focus is always on education. We are constantly striving to educate our clients, their families, and advisors around the community. One thing we stress is trust “funding”. Trust funding involves the coordination of all your assets with your trust. This is to ensure all the instructions you lay out in your trust will apply to your assets in the event of a disability or a death.

We often see clients that have setup a trust several years ago and never done anything with it. It eventually becomes just a pretty binder on a shelf. Then, a disability or death occurs and the family goes into that pretty binder and discovers it is rather useless. However, if your assets are properly coordinated with your trust, the trust assets will be managed by the next person you have named as trustee upon your death or disability. This makes a death or disability situation easier for your loved ones as they can avoid dealing with the courts (resulting in less cost). The trust structure also provides additional asset protection for your beneficiaries.

The key is understanding the importance of trust funding. It is important to ask yourself with every asset, “If I become disabled or pass away, what would happen with this particular asset? Who would it go to and how?”. Our InSight Law Maintenance Plan allows us to be a resource for our clients. We guide them through the funding process initially and help them as assets change overtime. It is truly a success for us if our clients understand trust funding and all the benefits they are providing their loved ones.

Note to all our InSight Law Maintenance Plan clients– you will be receiving your Asset Review Report this December. Please pay special attention to your action items listed and return your Asset Review Reports to us with updated values and any new assets. The success of your plan depends on it!

Savings Bonds – A Hidden Gem in Your Estate?

Over $9 billion worth of savings bonds and $200 million in registered Treasury securities have stopped earning interest, but haven’t been cashed in by the owners,according to treasurydirect.com. Why is so much money simply in limbo? Well, the truth is that when many people hear the term “savings bonds” they conjure an image of their grandparent giving them a piece of paper for a nominal amount of money and being told to “hold onto this since it may be valuable someday.”  Savings bonds are simply not considered “sexy” investments and therefore get tossed aside and forgotten by the purchasers and/or the heirs. Many clients who purchased savings bonds decades ago, may have even forgotten that they purchased the bonds.

Understanding How Savings Bonds are Passed On

Savings bonds are “non­probate” assets, which means they are not inherited through the provisions of a Last Will and Testament. In fact, savings bonds are more akin to retirement accounts and life insurance policies. They are “payable on death” to the person named as co­owner or beneficiary. However, it is important you actually name a payable on death beneficiary to avoid hassle for your loved ones. This means the bonds can be distributed immediately after a loved one passes on.

What To Do If You Inherit Savings Bonds

In many cases, when someone receives savings bonds from a deceased loved one, they want to go ahead and cash out. This can be a big mistake that you regret down the road. The more prudent decision would be to sit down with an experienced estate planning attorney  or a CPA to discuss your options.

Is Your Bond Still Accruing Interest?

Answering this question is a critical first step in determining the value of your savings bonds. In addition to determining whether interest is still accruing, you also need to determine the rate of interest. If your bonds were issued fairly recently, you can obtain this information electronically.  A good tool to use is the government database, Treasury Hunt. However, this site provides only a limited record and includes only Series E bonds issued in 1974 or later that have reached final maturity. For paper savings bonds, you can try to determine the value by visiting the “Savings Bond Calculator:”

http://www.treasurydirect.gov/BC/SBCPrice

Deciding Whether to Redeem or Reissue the Bonds

If you discover that your savings bonds have not yet “matured” (i.e. still accruing interest) you have a decision to make. You can redeem the bonds or get them “reissued” in your name (as opposed to the name of your deceased loved one). If you get them reissued, the benefit is that you continue earning whatever interest the bond pays until its maturity date.

Tax Ramifications of Savings Bonds

Yes, those pieces of paper that your grandparent may have given you decades ago could actually be worth a lot of money. If the total value of the savings bonds exceeds $100,000, federal regulations actually require that the bonds be administered through a court. There is a separate procedure that must be followed when smaller sums are involved and will generally enable you to avoid having to go to court.

Other Ways You Can Give Money as a Personalized Gift

On special occasions, many Americans decide to give a spouse, child, or other loved one a financial gift. However, they often fail to optimize these monetary contributions due to tax reasons. Bankrate created a guide that provides tips to help individuals maximize their monetary giving and ensure the most personal gift for each recipient. It also includes information on the benefits and tax implications for a variety of different financial gift options. Check out the guide here. 

Speak to an Experienced Estate Planning Attorney Today

As you can see, even savings bonds can get somewhat complicated and may impact your loved ones after you pass on. It is strongly recommended that you go through your records to determine if you currently have savings bonds and when the maturity date is. You should have a plan in place on how those bonds will be distributed upon your death. This is where an experienced estate planning attorney comes into play. An attorney can also be extremely helpful if you suddenly receive savings bonds and want advice on how to move forward with either redeeming or reissuing those bonds. Either way, speak to an estate planning attorney in your area for guidance.

Savings Bonds – A Hidden Gem in Your Estate?

Over $9 billion worth of savings bonds and $200 million in registered Treasury securities have stopped earning interest, but haven’t been cashed in by the owners,according to treasurydirect.com. Why is so much money simply in limbo? Well, the truth is that when many people hear the term “savings bonds” they conjure an image of their grandparent giving them a piece of paper for a nominal amount of money and being told to “hold onto this since it may be valuable someday.”  Savings bonds are simply not considered “sexy” investments and therefore get tossed aside and forgotten by the purchasers and/or the heirs. Many clients who purchased savings bonds decades ago, may have even forgotten that they purchased the bonds.

Understanding How Savings Bonds are Passed On

Savings bonds are “non­probate” assets, which means they are not inherited through the provisions of a Last Will and Testament. In fact, savings bonds are more akin to retirement accounts and life insurance policies. They are “payable on death” to the person named as co­owner or beneficiary. However, it is important you actually name a payable on death beneficiary to avoid hassle for your loved ones. This means the bonds can be distributed immediately after a loved one passes on.

What To Do If You Inherit Savings Bonds

In many cases, when someone receives savings bonds from a deceased loved one, they want to go ahead and cash out. This can be a big mistake that you regret down the road. The more prudent decision would be to sit down with an experienced estate planning attorney  or a CPA to discuss your options.

Is Your Bond Still Accruing Interest?

Answering this question is a critical first step in determining the value of your savings bonds. In addition to determining whether interest is still accruing, you also need to determine the rate of interest. If your bonds were issued fairly recently, you can obtain this information electronically.  A good tool to use is the government database, Treasury Hunt. However, this site provides only a limited record and includes only Series E bonds issued in 1974 or later that have reached final maturity. For paper savings bonds, you can try to determine the value by visiting the “Savings Bond Calculator:”

http://www.treasurydirect.gov/BC/SBCPrice

Deciding Whether to Redeem or Reissue the Bonds

If you discover that your savings bonds have not yet “matured” (i.e. still accruing interest) you have a decision to make. You can redeem the bonds or get them “reissued” in your name (as opposed to the name of your deceased loved one). If you get them reissued, the benefit is that you continue earning whatever interest the bond pays until its maturity date.

Tax Ramifications of Savings Bonds

Yes, those pieces of paper that your grandparent may have given you decades ago could actually be worth a lot of money. If the total value of the savings bonds exceeds $100,000, federal regulations actually require that the bonds be administered through a court. There is a separate procedure that must be followed when smaller sums are involved and will generally enable you to avoid having to go to court.

Other Ways You Can Give Money as a Personalized Gift

On special occasions, many Americans decide to give a spouse, child, or other loved one a financial gift. However, they often fail to optimize these monetary contributions due to tax reasons. Bankrate created a guide that provides tips to help individuals maximize their monetary giving and ensure the most personal gift for each recipient. It also includes information on the benefits and tax implications for a variety of different financial gift options. Check out the guide here. 

Speak to an Experienced Estate Planning Attorney Today

As you can see, even savings bonds can get somewhat complicated and may impact your loved ones after you pass on. It is strongly recommended that you go through your records to determine if you currently have savings bonds and when the maturity date is. You should have a plan in place on how those bonds will be distributed upon your death. This is where an experienced estate planning attorney comes into play. An attorney can also be extremely helpful if you suddenly receive savings bonds and want advice on how to move forward with either redeeming or reissuing those bonds. Either way, speak to an estate planning attorney in your area for guidance.