Economic Update

Revocable and Irrevocable Trusts

A common element of 90% of our clients’ estate plans is a revocable (or living) trust. Not so common are irrevocable trusts. Today, let’s look at both.

The purposes of both trusts are to 1) protect your assets and 2) distribute assets as you—rather than a probate court—see fit. The biggest, but not only, difference between the two is that the terms of a revocable trust (e.g., beneficiaries, trustees, type and amount of assets funding the trust, and method of distribution) can be changed at any time. Only once you die does a revocable trust become irrevocable.

An irrevocable trust—as the name implies—is not changeable once put in place (unless all beneficiaries agree to a modification via a lengthy process that may involve a judge) and remains in place after your death. All assets in an irrevocable trust are owned not by you as the creator (grantor) of the trust, but by the trust itself.

By moving the ownership of assets to a trust, people whose estates exceed the gift/estate tax exemption threshold (in 2023 that’s $12.92 million for individuals and $25.84 million for a married couple) can reduce the value of their estates to qualify for the estate tax exemption.

Funding Revocable Trusts

The type of assets that we see in revocable trusts are those grantors want to control during their lifetimes. They include everything from contents of safe deposit boxes and bank and investment accounts to real property, such as homes, land, and real estate.

Funding Irrevocable Trusts

The assets that fund irrevocable trusts can include large life insurance policies (Medicaid may consider the cash value of these policies in certain circumstances.) and assets that have appreciated significantly in value. For example, a stock in your portfolio that has appreciated the most in value would be the last investment you’d likely sell due to the tax implications. At your death, however, beneficiaries of your trust would receive a step-up basis in that stock to the date of your death.

Caveats, Cautions and Exceptions

It’s impossible to cover every nuance of these trusts in a short (or even long!) article. We routinely work with our clients and their estate planning attorneys to create and properly fund the type of trust that best fits each person’s goals and estate size and composition. We’d be happy to discuss whether and how a trust could help you achieve your goals at any time or during your 2023 Review Meeting.

Lifestyle

Sail Away in Style

Do you love cruises but hate long buffet lines, too-few deck chairs and a standard menu of shore tours? Perhaps a cruise on a “small ship” (river cruises, Lindblad Expeditions / National Geographic, Sea Cloud Cruises or Uncruise Adventures) might be what you’re looking for. (We’re not endorsing any of these companies. We are simply intrigued by the experiences they advertise.)

If a small ship is still not small enough, there are a host of options in the luxury yacht vacation market. According to a charter broker quoted in Condé Nast:

• The entry price point is around $40,000 for a week on a yacht 82-feet upwards that can sleep six. Food, beverages, fuel, and dockage are extras.
• Use a yacht broker, preferably one recommended by a friend, to find the yacht and itinerary that’s perfect for you.
• The crew is key to the success of a voyage.
• Pick your fellow travelers carefully.

To that list, we would only add that we are excellent fellow travelers.

Labor Day is Transition-to-Schwab Day

If you currently receive statements from TD Ameritrade, please take a moment to read this article and a more detailed version in our July 8 newsletter.

Next week at this time, while we are enjoying the last long weekend of the summer, the folks at Schwab will be hard at work transferring all accounts from TD Ameritrade.

Reminder: Access to your TD Ameritrade accounts will close on Friday, September 1 at 8:30pm (Eastern). If there are any trades executed that day, confirmations will be sent to you via mail. The markets will be closed on September 2, 3 and 4, and you will have access to your Schwab account on the fifth beginning at 5:00am (Eastern).

If you have any questions about the conversion process, please don’t hesitate to call our office.

Introducing Our Newest Team Member

Darlene Brown

In early August, Darlene Brown joined Obsidian as an administrator. One of her first tasks is to schedule the Review Meetings that begin in September. You’ll find that Darlene is the person who can connect you with the people and information you need because she has a unique blend of emotional and technological intelligence.

Darlene honed her communication and organizational skills in a public accounting firm as the first point-of-contact for 2000+ clients. For over 20 years, she’s put her two web development degrees to work helping companies and individuals understand and navigate the capabilities and challenges of the online world.

We’re thrilled to welcome Darlene to our team.

Review Meeting Process Change

Please don’t be surprised if you hear from one of our team members rather than Jay Wilen to set up a Review Meeting. Jay has scheduled his own meetings in the past, but we’re taking this task off is plate so he can focus on planning and investment-related activities. Don’t worry: The person contacting you will have all the information necessary to schedule your meeting. Check out the How We Help article in this newsletter for more information.

How We Help

Review Meetings

At least once each year, our advisors meet with every person in our financial planning practice. We tailor the meeting’s agenda to each person’s unique goals and values. During these Review Meetings, we listen. We review your planning accomplishments and want to hear about any changes you’ve made over the past 12 months (financial and otherwise), any adjustments to and progress toward your goals, as well as what’s going on and what’s ahead in your life. Please bring along any questions you may have about estate planning, investments, insurance, and any other topic that interests you. Of course, we’re available to you beyond your Review Meeting, so please feel free to reach out with questions at any time.