Estate Planning

Estate Planning

Having an estate plan is among the most important things you can do for your loved ones. However, it is a task for many of us to dread and put off dealing with up to later in life. If there is one thing we can recommend, it is that planning never gets too early, but it can be too late. Do you have an estate plan that will provide for your loved ones in case of death or disability?

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What Is Estate Planning?

Estate planning is the act of preparing a person’s wealth and assets to be transferred after his or her death. It also takes into account the planning of the assets and financial obligations of an individual should they become disabled. Assets, life insurance, pensions, real estate, automobiles, personal belongings, and debts are all part of the estate.

Estate planning just determines who you want to get your estate after you die and also plan for the future.

It’s a way of mapping out your financial, family, and legacy wishes and plans. This is not just for the rich. Most people have assets that require ahead planning.

Without a proper estate plan, friends and relatives can battle over your assets for a lifetime (and their life savings). It can be intimidating, but it’s a necessary step to ensure your assets end up where you want them, without IRS or third party interference.

Individuals have different reasons for planning an estate, such as preserving family wealth, providing surviving spouses and children, funding education for children and/or grand kids, or leaving their legacy to a charitable cause.

Preferably a good estate plan also aims at minimizing the tax burden on those who inherit your assets.

Steps to consider in Estate Planning

In estate planning, the simplest step involves writing a Will. Other major tasks relating to estate planning include:

  • Restricting estate taxes by establishing trust accounts in the name of beneficiaries
  • Assigning a guardian for living dependents
  • Naming an executor of the estate to look after the terms of the will
  • Creating/updating beneficiaries on plans such as life insurance, IRAs and 401(k)s
  • Preparing up funeral arrangements
  • Establishing annual gifting to qualified charitable and non-profit organizations to reduce the taxable estate
  • Preparing durable power of attorney (POA) to direct other assets and investments
  • Using Life insurance

Preparing an Estate Plan

Creating a legacy reasonable with your dreams and values is a personal process, which is often complicated.

Yet the effort is well worth it.

Try setting up a family estate planning meeting to help communicate better, prevent conflicts, and let your family know what matters to you.

When you undergo a major family or life change that affects who you want to inherit your estate, it is extremely important that you update your beneficiaries into your estate plan.

After having given some thought to your wishes, including the needs of family members that you want to provide, seek professional guidance from an advisor for estate planning.

To help you estimate your estate's value, you'll need to consider the following:

  • Current income and future income
  • Annual expenses
  • Current assets and debts
  • Tax implications of federal transfer taxes, state death taxes, and federal income taxes

Planning For Retirement

Retirement planning is one of the main advantages that a financial planner offers. The financial planner can set up 401(k), IRAs, Roth IRAs, and other retirement accounts like these.

These accounts have unique laws that control who can inherit certain assets and give the beneficiaries some tax benefits.

For example, the beneficiary of a 401(k) is always the surviving spouse, without a waiver from the spouse.

Also, an IRA has specific conditions for children who inherit IRAs from their parents. The children can take certain actions that allow the inherited IRA assets to increase tax-free over a period of time.

An expert financial advisor should be in a position to sit down with you and draw up a retirement plan that fits your overall plan.

None of us here like to think about our death or the possibility of not being able to make our own decisions.

That is precisely why, when incapacity or death strikes, so many families are caught off guard and unprepared.

For this reason, you should not wait, instead, start thinking and act today which is certainly the way you should do estate planning.

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