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What Does Per Stirpes Mean For Beneficiaries In A Will?
When you are creating your estate plan, it is important to look beyond your primary beneficiaries and consider what happens to their inheritance if they precede you in death. If you add a per stirpes distribution to your will, the beneficiary's share of your assets will pass to their direct descendants if they die before you.
What Is An A-B Trust?
Individuals sometimes use an A-B trust, or bypass trust, in their last will and testament or living trust for potential estate tax benefits. It is generally only used by couples whose estate is over the estate tax filing threshold, which in 2022 was $12.06 million.
Are Trust Funds Subject to Inheritance Tax?
Taxpayers may establish trust funds to pursue several goals, including orderly distribution of assets, tax management, and a desire to provide income to beneficiaries. Often, tax management is a priority. Keep in mind that federal estate taxes only apply when an estate's value exceeds $12.06 million. Very few estates meet that threshold. However, the tax rate imposed on amounts over the threshold is forty percent, which can take a hefty bite out of an inheritance.
How to Set Up a Trust Fund
If you decide to establish a trust fund, consider your goals before you begin. Doing so will help you determine whether you need a trust and, if so, what type is most appropriate. Trust funds and wills are each estate planning tools and often work together to describe how you want your assets distributed after you die. Trusts can also contribute to tax management strategies and disseminate assets and income while you are still living.
What is a Trust Fund and How Does it Work?
The phrase "trust fund" invokes a vision of wealth, privilege, and even tax avoidance. However, there are many types of trusts, and they have varied purposes. Indeed, many intend to support the perpetuation of wealth and seek to manage taxes for both the grantor and the beneficiary. The grantor is the individual who establishes the trust, the trustee is the neutral third party responsible for managing and distributing the assets according to the grantor’s instructions, and the beneficiary is the recipient. In some cases, the trustee may also be a beneficiary.
What is the Average Return on an 80/20 Portfolio?
Every investor wants to pursue earnings while maintaining an acceptable exposure level, but the right balance of risk and reward differs from one person to the next. As an investor, your ability to achieve your goals is affected by your available assets and the amount of risk you can accept in the quest for reward. This calculation is sometimes called your risk tolerance. Your personal risk tolerance indicates how you may react to the ups and downs of particular investment options.
What is the Average Return on a 75/25 Portfolio?
For investors, crafting a portfolio involves several steps, typically repeated periodically. After all, an investor’s needs and circumstances change, which likely means their approach to investing should also. One of the essential steps is deciding on your asset allocation, which is one of the key determinants of your portfolio composition. It’s up to you to determine the appropriate distribution of your available assets based on your investment goals and risk appetite.
Why is Goal Setting Important in The Financial Planning Process?
For many people, even sophisticated investors, the concept of financial planning is intimidating. It may seem unnecessary for those with fewer assets, but it's essential for everyone, no matter the size of your portfolio. A successful financial plan is not a static document but is flexible and subject to change as your goals and circumstances change.
What is The First Step in Financial Planning?
The question of what the first step in financial planning is doesn’t have a simple solution. In fact, Forbes’ Finance Council recently asked a selection of financial experts that very question and came up with a diverse group of responses. Their suggestions included these:
What Is Replacing The 60/40 Portfolio?
The 60/40 portfolio, also known as the 60/40 asset allocation, has been typically understood in financial planning and investment circles as a method to balance risk while promoting growth. The strategy is that stock investments make up 60%, while bonds make up the remaining portion. With this combination, it’s been thought that stock holdings could grow, over time, while bonds might provide a cushion during economic downturns.
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