After meeting with their personal tax and legal advisor, Carol and Bob started putting their plan in place to help protect their family. Each of them signed, along with two witnesses, a comprehensive will that names a legal guardian for any minor children should the need arise, as well as names an executor to manage their probate estate. Carol and Bob also completed an inventory of their assets, including a list of their digital assets.

Carol and Bob executed a health care power of attorney and living will. These documents express their medical care preferences and instructions should either become mentally incapacitated or unable to communicate decisions. Additionally, Carol and Bob executed a durable financial power of attorney. This document names an agent to act for them (Carol and Bob will be the first named agent on each other’s power of attorney), should either of them become incapacitated, and gives this person the power to make financial decisions for them, according to Carol and Bob’s wishes.

Carol and Bob are also considering a revocable trust. They both learned that assets titled in their trust will avoid probate and provide privacy with respect to its terms since a revocable trust is not part of the public record. Although a revocable trust does not provide any income or estate tax advantages, it will provide Carol and Bob peace of mind knowing that a successor trustee designated in the trust can step into their place as trustees to manage their assets as indicated in the trust, without court supervision.

The meeting with Carol and Bob’s financial professional also went well. They learned that they had a need for life insurance death benefit. Additionally, since life insurance has a named beneficiary, the death benefit passes outside the probate process. Depending upon the size of their estate, Carol and Bob may want to consider whether an irrevocable life insurance trust (ILIT) would be appropriate. An ILIT could be the owner and beneficiary of a life insurance policy, as well as other assets. Assets owned by an ILIT will be outside the insured’s taxable estate. One important note though, as the name implies, an ILIT is an irrevocable trust, so assets that are gifted cannot be taken back.

Because they still have school aged children, Carol and Bob are looking to save for college should their children wish to go. By working with their tax and legal advisors who pointed out some choices to consider, they can feel secure that they are taking steps to help plan for the cost of their children’s education.

Retirement planning has also been on Carol and Bob’s minds lately. They started thinking about their retirement goals and how long it will take to get there. There are a variety of options that can help them achieve their goals. Carol and Bob’s financial professional pointed out that they need to understand their time horizon which will help determine the level of risk they will need to take. They also need to have realistic expectations about their spending habits once in retirement. This will help define the amount they will need to save. Don’t forget about longevity – they don’t want to outlive their savings! Armed with this information, the help of their financial professional, and the will to enjoy their future retirement, Carol and Bob are on their way to building a financial cushion that will help fund the retirement for which they are striving.