Recently, we sat down with Debi Stark, a CapFed® Trust Officer, to discuss what you need to know about trust and estate planning.
Explain estate planning for individuals who don’t fully understand the process.
Debi: Estate planning involves determining how an individual’s assets will be preserved, managed and distributed after death or in the event they become incapacitated. It serves as a tool to assist in protecting your interests during your lifetime and safeguards your family after your passing. Prior to initiating the estate planning process, it is wise to meet with both a trust officer and an estate planning attorney.
When is the right time to begin the estate planning process?
Debi: Anyone over the age of 18 can benefit from estate planning. Estate planning is made up of five core documents:
• Durable power of attorney
• Health care power of attorney
• Last will and testament
• Revocable living trust
• Living will/advance directive
Estate planning shouldn’t solely be viewed as preparations for after you are deceased, it’s also about planning for incapacity during your lifetime. Health emergency or accidents can happen to anyone at any time.
What are the advantages of estate planning – not just for yourself, but your loved ones?
Debi: We all want our assets and loved ones protected when we can no longer actively manage our financial lives, and starting the estate planning process will do that. Without a directive in place, your family could face big tax burdens and the courts can designate how your assets are divided – and even who will get custody of your children. When a trust is created, the terms are private. Wills on the other hand have to be filed with probate court and anyone can have access to it.
What happens to my assets if I pass or become incapacitated without a will or advance directive in place?
Debi: In the event of your death, in the state of Kansas, 50% of your assets will pass to your spouse and 50% will pass in equal shares to your children. If you don’t have a spouse or children, your parents will inherit. If you become incapacitated and don’t have a durable power of attorney and a health care power of attorney in place, your loved ones will need to go to court to allow someone to act on your behalf.
How difficult is the process of making changes to my estate once it’s finalized?
Debi: It’s not difficult to change a will. You can amend, modify, update, or even completely revoke your last will at any time—provided you're mentally competent. You will need to have your attorney prepare a codicil (an addition or supplement that explains, modifies, or revokes a will or part of one) and attach it to the original will. If you have a trust, your attorney can prepare an amendment. It is important to keep your estate planning documents up to date. Reviewing them every 3 to 5 years is a good way to ensure they comply with your current wishes and recent legislation.
What are common misconceptions about trusts and estate planning?
Debi: Estate planning remains one of the most misunderstood areas of planning. A common misconception about estate planning is the time it takes to establish a trust that you’re comfortable implementing. A good trust will take an average of 4 to 5 weeks to complete. So, realistically, it cannot be completed in one sitting. Another misconception about estate planning is it only benefits the super wealthy. This simply is not true. If you own property and assets, or have loved ones that depend on you to provide for their income or care, you have an estate and need a plan. An estate plan is critical for protecting their interests and their future income needs.
What role do you, as a Trust Officer, play in my estate plan?
Debi: As a Trust Officer, I can assist in the estate planning process with my clients. Some of my responsibilities include communicating with clients, agencies, advisors and other bank personnel on the laws and options concerning trust and estate matters. Trust officers play an important role in assisting clients with financial decisions that impact them both professionally and personally.
Why is it important to have a financial advisor when estate planning?
Debi: It’s important to have a financial advisor who understands your estate planning goals because those goals should play a role in your financial plan. When your advisor understands your priorities, they can help find the best solutions to meet your needs. At Capitol Federal Investment Services, we have a team that can review your estate plan and your financial plan and be sure they are working together to achieve the best outcomes for you and your loved ones.
Communication is key when one begins the estate planning process. No matter your net worth, age or marital status, everyone should engage in estate planning. If you have a bank account, investments, a car, home or other property—you have an estate.
Estate planning should be looked at as part of life planning. Contact a Capitol Federal Trust Team member today to begin planning your future.
Assets in Trust and Investment Management Accounts, unless otherwise indicated:
• are not FDIC insured
• are not a deposit or other obligation of the depository institution
• are not guaranteed by the depository institution
• are not insured by any government agency
• are subject to investment risks, including the possible loss of the principal amount invested
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