AS YOU LOOK TO GET your financial affairs organized, start with your letter of last instruction. Do you find yourself writing a lengthy description of where all key papers are located and how you want matters handled after your death? That’s probably a sign that you need to organize and simplify.
While folks are often advised to keep key documents in a safe-deposit box, this has a downside. After your death, the box may be sealed,

A LETTER OF LAST instruction isn’t a substitute for a will. Still, it’s worth drawing up, because it will help your family settle your affairs in the weeks and months after your death. In our paperless world, a letter of last instruction—sometimes called a doomsday letter—has become especially important, because you may not have paper statements lying around to help your family identify your assets and liabilities. What should your letter include? It’s up to you,

IF YOU BECOME incapacitated toward the end of your life, it may be difficult for your family to make financial and medical decisions on your behalf unless you have durable powers of attorney drawn up.
You will likely want two powers of attorney, one for health care matters and the other for financial decisions. These powers of attorney are often “springing,” meaning they don’t become effective until a doctor certifies that you are incapacitated.

IF YOU’RE WORRIED about lawsuits, an asset protection trust could put your wealth beyond the reach of your creditors. For a trust to provide this sort of protection, it has to be irrevocable and needs to have spendthrift provisions. In other words, you can’t reclaim the money put into the trust and you can’t control how much the trust distributes each year. Instead, distributions would be at the discretion of an independent trustee, who might cease all distributions if you’re the subject of a lawsuit.

A QUALIFIED Terminable Interest Property, or QTIP, trust can provide income for your spouse, while also naming the ultimate beneficiaries of the trust’s assets. Sound like a bypass trust? It is—except a bypass trust makes use of your federal estate tax exclusion, while a QTIP trust takes advantage of the unlimited marital deduction.
This might seem unnecessary. After all, you could simply leave the money to your spouse, and that also would take advantage of the unlimited marital deduction.

SUPPOSE YOU AND YOUR partner have substantial wealth, but you aren’t legally married. To ensure you both take advantage of the federal estate tax exclusion, you might use a bypass trust, which is funded upon your death under the terms of your will or living trust.
Let’s say you die first. Upon your death, your will might direct that a sum equal to the federal estate tax exclusion—$13.99 million in 2025—should go into a bypass trust,

LIFE INSURANCE proceeds are almost always income-tax-free to the beneficiaries. But will estate taxes be owed? This is an issue for a small fraction of estates. If it is, you might consider an irrevocable life insurance trust. The insurance proceeds could then be used to cover estate taxes owed on other assets. Alternatively, the proceeds might provide an inheritance to children who don’t want to be involved in the family business, thus avoiding the need to sell the business,

SUPPOSE YOU PLAN TO leave a healthy sum to your adult children, but you are worried they will quickly fritter away the money. Perhaps they have a problem with drinking, drugs or gambling. Perhaps they spend compulsively. Or perhaps you fear the inheritance will make them the target of scams and lawsuits.
One possibility is to leave money for their benefit in spendthrift trusts, from which the beneficiaries have no right to make withdrawals.

IF YOU HAVE A CHILD with a physical or mental disability who is unlikely to be self-supporting, you might set up a special needs trust, either during your lifetime or upon your death. By placing money in the trust, not only can you specify how the money should be spent, but also you won’t disqualify the child from receiving means-tested government benefits.
Typically, if a child has more than a modest amount of cash in his or her name,

IF YOU DECIDE TO make a charitable donation upon your death, you won’t get an income tax deduction, which you could receive if you made the gift during your lifetime. You will, however, shrink the size of your taxable estate.
You could simply name a charity in your will to receive some portion of your estate. But here’s an intriguing possibility: Donate your traditional IRA. As mentioned earlier in this chapter, beneficiaries (other than a spouse) of a traditional or Roth IRA typically have to draw down the account over 10 years.

WHILE CHILDREN CAN own property, they can’t legally enter into contracts. That makes it difficult for them to manage an investment portfolio, because they can’t buy or sell. This is the reason a child’s investment account needs an adult custodian—and the reason substantial sums bequeathed to children who are under age 18 or 21 are often placed in a trust, with a trustee overseeing the assets involved. Trusts for children are typically testamentary trusts,

LIKE A WILL, a revocable living trust is a way of detailing who should inherit your wealth after your death. But unlike a will, assets bequeathed via a living trust don’t go through probate. It’s also harder for disgruntled family members to challenge the terms of a living trust, and there isn’t the potential publicity that accompanies the probate process.
Why are these trusts referred to as revocable? Assets placed in the trust can be removed at any time.

WHEN FOLKS HEAR THAT someone has set up a trust or is the beneficiary of a trust, one thought often comes to mind: We’re talking about serious money. In the lexicon of wealth, the term “trust” is as evocative as “hedge fund,” “private equity” and “overseas bank account.”
In truth, a trust is just an estate planning tool, one that sometimes makes sense even for families with relatively limited wealth. Why would you use this tool?

YOUR HEIRS WILL likely appreciate what you bequeath them. But some bequests may be appreciated more than others.
At the top of the list would probably be a Roth IRA. Yes, estate taxes could be owed if your overall estate is large enough and, yes, your heirs will have to empty the account within 10 years. But there will be no income taxes owed on those withdrawals, and the money in the account could enjoy 10 additional years of tax-free growth after your death.

WHILE THE NIXING of the stretch IRA is a loss—your beneficiaries will likely have to empty your retirement accounts within 10 years, rather than over their lifetime—there’s no need for drastic action. But you may want to make four financial tweaks.
First, you might draw more heavily on your traditional retirement accounts to pay your retirement living expenses, while setting aside taxable account investments for your heirs. Those taxable account investments would still benefit from the step-up in cost basis that will occur upon your death.