Estate Planning
You've worked hard to build your wealth. If you want to preserve your wealth and protect your family's future, an estate plan is essential. Even if you don't have a large or complicated estate, you'll still benefit from implementing various estate planning strategies.
Your Azzad adviser can help you design an estate plan that's personalized for you and your family. Your plan can help protect, preserve and manage your estate if you die or become disabled.
Benefit from a personalized estate plan that can help you:
- Ensure that your wealth is passed on to your desired heirs without delay
- Specify who will care for your children who are minors or who have special needs
- Help your heirs minimize estate taxes and other transfer taxes
- Avoid the cost, delay, publicity and inconvenience of probate
- Avoid disputes among family members, business partners and third parties like the federal government
- Protect your hard earned wealth from any future potential creditors
- Leave a lasting legacy by providing to your favorite charity or cause
Use these five steps to estate planning success
Step one: Perform an inventory of your financial life
Use this estate planning worksheet to take an inventory of your assets, liabilities, current beneficiary designations, and professional situation. Along the way, make sure you update existing beneficiaries of your retirement accounts.
Step two: Define your estate planning goals
Your Azzad adviser can help you define your estate planning objectives. For example, what assets do you want to put aside for your children's ongoing education? Whom do you want to manage your affairs if you become disabled? To whom do you want your assets distributed, and in what proportions?
When defining your goals for your estate plan, keep in mind how taxes, probate, liquidity, incapacity and designated beneficiaries will affect the distribution of your estate. To see how taxes may affect your estate, use our estate tax calculator.
Step three: Pick a Winning Team
Designing and implementing your estate plan may require the expertise of a qualified estate planning team. This is especially true for larger, more complicated estates. Your Azzad adviser can successfully merge relationships between your attorney, accountant, and others to make estate planning easy.
Step four: Create & implement your personalized plan
Based on your goals, your Azzad adviser can help you consider and implement various estate planning strategies. If necessary, your attorney will formulate any legal paperwork that may be appropriate. For example, if an irrevocable trust is appropriate, you will need an attorney to draft the necessary documents. Your adviser will assist you in establishing and managing your trust according to your goals. Make sure you keep your documents organized and within easy access.
Step five: Keep your estate plan on track
After you've implemented your plan, be sure to perform periodic reviews. You may need to make changes to your plan to reflect changes in your life or in tax laws.
An Azzad adviser can help you put into action your estate plan. Call 888-862-9923 or email us to find out more.
Estate Planning Strategies
You may want to consider taking advantage of the following estate planning strategies:
- Create a Will: A Will should be the foundation to your estate plan. This document outlines how you want your property distributed after you die, who shall administer your estate and who will care for your minor children. Keep in mind however that assets distributed through a will still go through probate.
- Hold assets in a Trust: A trust is a separate legal entity that holds your assets that are then used to benefit the trusts' beneficiaries. There are many different types of trusts, each serving a different purpose. Irrevocable trusts can help you save money on estate taxes, while revocable living trusts can offer more flexibility. On the other hand, a donor advised fund is a tax smart way to leverage your generosity.
- Register your assets appropriately: Assets owned as joint tenancy with rights of survivorship pass automatically to the surviving joint owner at your death. Keep in mind though that the joint owner will have immediate access to your property, and your joint owner's creditors may reach the jointly held property. That's why, for some people, a Transfer on Death (TOD) registration is more appropriate.
- Designate beneficiaries: Make sure to update your beneficiaries of any retirement accounts you may hold. Employer plans like 401(k) plans generally transfer directly to your spouse. If you choose to designate a beneficiary to your retirement account other than your spouse, make sure you understand the possible consequences of your decision.
- Give outright gifts while you're alive: A gift is a transfer of property that you make during your life to family, friends or charity. Making gifts can be personally gratifying as well as an effective estate planning tool.
A legal process of settling an estate during which the validity of the will is proven, the deceased's assets are collected and accounted for, debts and taxes are paid, and remaining probate estate assets distributed. May be costly and time consuming for larger estates.
Registering your Azzad investment account as a Transfer on Death (TOD) may be a useful estate-planning tool. A TOD will allow you to avoid the costs and delays of probate by establishing a list of beneficiaries. Upon your death, the assets in your account will be transferred directly to your heirs.
Who's it for?
This service is only available to residents of states that have adopted the Uniform Transfer on Death Act. If your primary residence changes to a state that has not adopted this Act, the service will become void.
How does it operate?
You choose to register your investment account as a TOD. You name beneficiaries to receive your account's assets and indicate what percentage of the assets each beneficiary should receive. When you die, your assets will go directly to your designated beneficiaries instead of passing on to probate. As long as you are alive, your beneficiaries have no control or access to your account. You may also change your designated TOD beneficiaries at any time.
How can it save you money?
Probate can be costly and time consuming. By registering your investment account as a TOD, you'll save your heirs time and money. Keep in mind that any assets received in this manner are still subject to possible estate and federal (perhaps state) taxes.
To find out how a TOD can fit in your overall estate plan, call 888-862-9923 to speak to your Azzad investment advisor.
Open a transfer on death account (TOD)
* This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus or Ethical Wrap Program's brochure before you invest. The wrap minimum applies after meeting standard minimum with other accounts.
Overview
Unlike a revocable living trust, an irrevocable trust cannot be changed or dissolved once it has been created. That means you can't remove assets, change beneficiaries, or re-write the trust's terms. An irrevocable trust can be a valuable estate-planning tool for some individuals.
Benefits of an irrevocable trust:
- Since the assets pass directly to your heirs, you avoid probate
- May lessen potential challenges to or elections against a will
- Maintains your privacy because it avoids public disclosure of your financial affairs
- If you have out-of-state assets (such as real estate), it can help your heirs avoid ancillary probate
- Assets are removed from your taxable estate; which generally means no estate tax will be charged on these assets
- Assets in an irrevocable trust may be protected from creditors
An irrevocable trust has disadvantages associated with it, mainly:
- An irrevocable trust can have significant costs to set up and terminate
- With most irrevocable trusts, you will lose control of your assets
- Requires annual fiduciary accounting and possible tax returns
How an irrevocable trust works:
You transfer assets you don't mind losing control over into the trust. Your designated trustees (usually yourself), on behalf of the trust's beneficiaries, manage the trust's assets. You cannot change or terminate the trust's terms without the agreement of the beneficiaries. Trustees cannot be replaced unless they die or resign. The trust is responsible for any taxes generated by its assets. When a trustee dies, no estate taxes will be charged on the trust's assets.
Should you have an irrevocable trust?
There are many different kinds of irrevocable trusts. You'll need to work with an experienced attorney and your adviser to come up with the right one for your situation. Remember, trusts are not right for everyone. Your adviser can help you decide if an irrevocable trust is a sound estate-planning tool for you and your family. Call us at 888-862-9923 or email us.
Open an irrevocable living trust account
* This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus or Ethical Wrap Program's brochure before you invest. The wrap minimum applies after meeting standard minimum with other accounts.
Overview
A revocable living trust is primarily used to transfer assets directly to your heirs while avoiding probate. Probate can be costly and time consuming.
Living trusts are a legal entity you create while you're alive. What you choose to fund a trust depends on your goals.
Benefits of a revocable living trust
- If you become incapacitated, it can ensure that your financial affairs are properly managed
- Since the assets pass directly to your heirs, you avoid probate
- May lessen potential challenges to or elections against a will
- Maintains your privacy because it avoids public disclosure of your financial affairs
- If you have out-of-state assets (such as real estate), it can help your heirs avoid ancillary probate
- You may change, dissolve or amend a revocable living trust any time
A revocable living trust generally cannot accomplish the following
- Generally, a living trust does not minimize income, gift or estate taxes*
- In most cases, it cannot shelter trust assets from creditors
- You cannot select a revocable trust as the owner of your retirement account. That's because a change in ownership would be deemed a taxable distribution. Your account would lose its tax-advantaged status.
How a revocable living trust works
- You and your attorney create the revocable living trust. Typically, you name yourself as the trustee and sole beneficiary during your lifetime (if married, both spouses are typically named beneficiaries). You, the grantor, also name a successor trustee or co-trustee, as well as the beneficiaries who shall receive any assets that remain in the trust upon your death. A spouse or child is usually named as the successor or co-trustee and is also named as the ultimate beneficiary.
- Fund and manage the assets of the revocable living trust. Your Azzad adviser can help you set up an appropriate investment plan to manage your trust based on your unique needs. You may also want to transfer legal title from your name to the trust for any other assets you wish to include in the trust- such as real estate or checking accounts.
- Pay any applicable taxes that the trust may incur. Any income earned or expenses incurred by the trust flow directly to your (the grantor's) individual income tax return. That means you're responsible for any taxes or expenses generated by the assets in your revocable living trust account.
Should you have a revocable living trust?
Bypassing probate may not be an appropriate goal for everyone. For smaller estates, it may not even be an issue. In some cases, the costs associated with a living trust may actually outweigh probate costs. Remember, establishing a living trust requires the special services of a trusted attorney. On the other hand, for other estates, a revocable living trust may be an important estate-planning tool.
Your Azzad investment adviser can help you decide if a living trust is right for you. Call us at 888-862-9923 or email us. Open a revocable living trust account
*Upon the grantor's death, the trust becomes a separate taxpayer and different income tax rules apply.
* This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus or Ethical Wrap Program's brochure before you invest. The wrap minimum applies after meeting standard minimum with other accounts.
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