A payable-on-death account, also called a POD account, is a common way to keep bank and investment accounts out of probate, the court-supervised process that oversees distributing a deceased person’s property. Most people want to avoid their estate going through probate because their heirs will receive the inheritance faster, privately, and at lower cost.

Is a POD account an appropriate solution for your needs? Let’s examine what POD accounts do and how they fit into the overall picture.

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Many children and grandchildren are skipping the traditional bank and obtaining loans from parents or grandparents. Unfortunately, we have all heard stories of families torn apart because of disagreements over money. So, what can you do to make sure your intra-family loans help —rather than hurt —your family?

As far as estate planning is concerned, money you lend to others is legally an asset. If you have lent money to a family member the presence of these assets in your estate can be problematic for your surviving family members. This is because your executor and successor trustee are under a legal requirement, known as fiduciary care, to collect the outstanding obligation, even if the other party is a family member.

If the amount of money that you have lent out is significant –and “significant” can be relative –it is important to let us know as we help you plan your estate. For example, if you wish to forgive the debt there are special terms that must be included in your trust or will for this to happen. On the other hand, you may want the debt to be paid out of the inheritance the borrower is otherwise receiving. In that case, the payment of the debt from the inheritance must be addressed in your estate planning documents.

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If you carry debt, do not assume that your death or incapacity will make it automatically disappear. To the contrary, the money you owe may eat away at the assets you were planning to leave to your heirs or –if you owe a large amount of money –may wipe out your estate completely. Debt comes in many different forms including credit cards, student loans, car payments, mortgages, and other financial obligations.

Not Just About Assets

Estate planning lets you name people you trust to manage your affairs if you’re unable to do so and lets you indicate who will receive your property upon your death. While estate planning typically focuses on ensuring your assets will be distributed to your intended beneficiaries upon your death, the collective purpose behind financial and estate planning is to ensure that you’re building the largest nest egg possible and then protecting your family and loved ones in the event of your death or incapacity. For this reason, knowing what your debts are and implementing the proper estate planning will allow you to ensure those you leave behind are not left drowning financially. You will also be able to rest easy knowing what you’ve built will go to those you want, rather than to the creditors.

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If you’re enrolled in a qualified high-deductible health plan (HDHP), you must consider how your health savings account (HSA) fits into your estate plan—especially to make sure that any hard-earned money left in your HSA when you die goes where you want it.

What is an HSA?

An HSA is an account whose funds may be used to pay for qualified medical expenses or saved for expenses that arise in the future. These accounts have several tax advantages. You can deduct contributions to the account up to the yearly limit. You pay no income taxes on earnings in the account (such as interest or dividends). And, withdrawals from the account to pay for qualified medical expenses are tax-free. An HSA is an option for any one enrolled in a qualified HDHP. Your insurer will be able to tell you if you have a qualified HDHP.

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It’s the start of a new year, which means tax season—and this year’s April 17th IRS filing deadline—is just around the corner. Soon you’ll be receiving tax forms such as your W-2 or 1099s, and you’ll start thinking about the life events that could affect your taxes in various ways.

This flurry of tax prep activity is the perfect opportunity to get your estate plan in order, too, and kill two birds with the proverbial stone.

Why? Because as you run down your list of “tax prep” questions, you will find that your answers could also impact your estate plan.

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There are many tools that can be used when putting together your estate plan. One such tool is a trust.

A trust is a fiduciary arrangement, established by a grantor or trust maker, which gives a third party (known as a trustee) the authority to manage assets on behalf of one or more persons (known as a beneficiaries). Since every situation is different, there are different types of trusts to ensure the best outcome for each beneficiary. One type of trust, known as a spendthrift trust, is commonly used to protect a beneficiary’s interest from creditors, a soon-to-be ex-spouse, or his or her own poor management of money. Generally, these trusts are created for the benefit of individuals who are not good with money, might easily fall into debt, may be easily defrauded or deceived, or have an addiction that may result in squandering of funds.

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