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February 23, 2021
Estate Planning Basics: Wills, Trusts and More
You’ve worked hard over the years, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends and the causes that are important to you. To ensure that your legacy reaches your heirs as you intend, you must make the proper estate planning arrangements now. There are four basic ways to do this: by will, by trust, by beneficiary designation and by joint ownership arrangements.
A will is the cornerstone of any estate plan. You should have a will no matter how much your estate is worth, even if you’ve implemented other estate planning strategies.
You can leave property by will in two ways: making specific bequests and making general bequests.
Specific bequest: This directs a particular piece of property to a particular person. (“I leave Aunt Martha’s diamond broach to my niece, Jen.”)
General bequest: This is usually a percentage of property or property that is left over after all specific bequests have been made. Normally, principal heirs receive general bequests. (“I leave all the rest of my property to my wife, Jane.”)
With a will, you can generally leave any type of property to whomever you wish, with some exceptions, including:
- Property will pass according to a beneficiary designation, even if you name a different beneficiary for the same property in your will.
- Property owned jointly with rights of survivorship passes directly to the joint owner.
- Property in a trust passes according to the terms of the trust.
- Your surviving spouse has a right to a statutory share of your property, regardless of what you leave him or her in your will.
- Children may have inheritance rights in certain states.
You can also leave property to your heirs using a trust. Trust property passes directly to the trust beneficiaries according to the trust terms. There are two basic types: living (also called revocable) and irrevocable.
Living trusts: These are very flexible because you can change the terms of the trust (e.g., rename beneficiaries) and the property in the trust at any time. You can even change your mind by taking your property back and ending the trust.
Irrevocable trust: These, on the other hand, can’t be changed or ended except by its terms, but can be useful if you want to minimize estate taxes or protect your property from potential creditors.
You create a trust by executing a document called a trust agreement, and you should have an attorney draft any type of trust to be sure it accomplishes what you want.
Note: a trust can’t distribute property it does not own, so you must transfer ownership of your property to the name of the trust. Property without ownership documentation (such as jewelry, tools or furniture) is transferred to a trust by listing the items on a trust schedule. Property with ownership documents must be re-titled or re-registered.
You must also name a trustee to administer the trust and manage the trust property. With a living trust, you can name yourself trustee, but you’ll need to name a successor trustee who’ll transfer the property to your heirs after your death. A living trust is also a good way to protect your property in case you become incapacitated.
Property that is contractual in nature, such as life insurance, annuities and retirement accounts, passes to heirs by beneficiary designation. Typically, all you have to do during the estate planning process is fill out a form and sign it. Beneficiaries can be persons or entities, such as a charity or a trust, and you can name multiple beneficiaries to share the proceeds.
When setting up your beneficiary designations, you should:
- Name primary and contingent beneficiaries.
- Avoid naming minor children as beneficiaries, though you can, however, name a guardian to receive the proceeds for the benefit of the minor child.
- Re-evaluate your beneficiary designations when your circumstances change, such as marriage, divorce or death of beneficiary. Remember, you can’t change the beneficiary with your will or a trust, but rather you must complete a new beneficiary designation form. (Note: Some beneficiaries can’t be changed. For example, a divorce decree may stipulate that an ex-spouse will receive the proceeds.)
- Consider the income and estate tax ramifications for your heirs and your estate when naming a beneficiary. For example, proceeds your beneficiaries receive from life insurance are generally not subject to income tax, while your beneficiaries will have to pay income tax on proceeds received from tax-deferred retirement plans (e.g., traditional IRAs).
Joint ownership arrangements
Two (or more) persons can own property equally, and at the death of one, the other becomes the sole owner. This type of ownership is called joint tenancy with rights of survivorship (JTWRS). A JTWRS arrangement between spouses is known as tenancy by the entirety in certain states, and a handful of states have a form of joint ownership known as community property.
You may find joint ownership arrangements are useful and convenient with some types of property but may not be desirable with all of your property. For example, owning an out-of-state residence jointly (such as a vacation home) can avoid an ancillary probate process in that state. However, it may not be practical to own property jointly where frequent transactions are involved, such as your investment portfolio or business assets, because you may need the joint owner’s approval and signature for each transaction. There are some other disadvantages to joint ownership arrangements, so talk to your financial professional to determine how joint ownership may be useful in your specific circumstances.
Questions? Contact a CFS Financial Advisor.
Grow has contracted with CUSO Financial Services, L.P. (CFS) to provide investment services, and your CFS Financial Advisor will help you build a plan that meets your needs. The advisor will look at your current spending, saving and investing, learn about your goals and priorities, make objective recommendations and support your efforts moving forward through the implementation and management of your plan.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members. For specific tax advice, please consult a qualified tax professional.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2021.
How to Find Your Routing & Account Numbers
When you make a payment online, by phone or on a mobile device, you may be asked for our routing number and your checking account number. Credit unions and banks use these numbers to identify accounts and make sure money gets where it’s supposed to be. You’ll also need to provide your routing and checking account numbers for:
- Direct deposits
- Electronic checks
- Military allotments
- Wire transfers
Where to Find Your Routing & Checking Account Numbers
Your personal checks include both our routing number and your account number, as shown on the Grow check example below.
Don’t have a Grow check? No worries.
Visit any Grow store and ask for a Direct Deposit Form. It lists both your routing number and checking account number.
Making a Loan Payment
When it comes to making payments, we try to make it as painless as possible to pay your loan every month. We have several different ways to pay, including convenient online options.
You have two ways to pay online by transferring funds from another bank or credit union.
- Grow Online Banking (Preferred payment method for any loan)
This is the simplest way to pay your loan. You can make one-time payments or set up automatic recurring payments in Grow Online Banking. Once you log in, select “Transfer/Payments” from the menu. If you’re not enrolled in Grow Online Banking yet, you can set up your account in just a few minutes.
- Debit Card or ACH (Available for auto, personal loans and HELOCs)
Note: ACH and debit card payments are not available for credit cards or most mortgages, except HELOCs.
We accept ACH payments with no additional fees or Mastercard® and Visa® debit cards with a convenience fee of $4.95. To get started with an online ACH or debit card payment, select Pay Now below.
Pay by Mail
You can also pay any Grow loan by check through the mail. Please remember to include your account number and Grow loan number on the check. (For credit card payments, please do not write your 16-digit credit card number on the check, which can cause a delay in processing the payment.)
Address for auto, credit card, personal loan and HELOC payments:
Grow Financial Federal Credit Union
P.O. Box 75466
Chicago, IL 60675-5466
Address for personal first or second mortgages and home equity payments:
Grow Financial Federal Credit Union
P.O. Box 11733
Newark, NJ 07101-4733