Estate planning is something you need to consider because if left unattended, could cause real issues. In this article, we will look at what estate planning is and some of the things you need to know.
What Is Estate Planning?
Basically, it’s about preparing a person’s end of life assets for want of a better word, “divvying up.” It is about arranging for the disposal of these assets as directed by the person concerned. One of the advantages of this type of planning is that it eliminates uncertainty. Provided there is a valid will, the estate and it’s assets are distributed as directed by the will.
What You Need To Know
- Estate planning isn’t just for the rich and wealthy, it’s for anyone who has family and accumulated assets meaning that the family needs including financial needs are met after your death.
- An estate plan is made up of different factors. Most people consider it’s just a will but that’s not true; you need to hire a power of attorney, a living will or medical-power-of-attorney. Remember, each state may have differing laws regarding tax so make sure you understand these and how they affect your plan.
- If you love your family then make sure you have a will. Without a will, they could lose everything you intended to leave them with. Without naming guardians, you put their financial future in jeopardy. You will have no input in who gets what.
- So what assets are we talking about? For example, everything from insurance policies to your investments. These will include real estate, business and savings you have accumulated.
- It’s important to establish just why you want to come up with an estate plan. A good rule of thumb includes defining who you want your assets left to. Be clear on this and who you trust to handle your affairs. If you know you are headed for a situation where you may not be able to make clear decisions because of failing health then appoint someone you trust to make the appropriate decisions.
- When an estate is “divvied up” things like taxes will come into play. Talk to your attorney about creating a trust. Apart from allowing you to declare how you want your assets disbursed they can protect you against high taxes including gift and assets.
- While it may be a morbid topic at the time, why not bring your family members together and let them know exactly what you are doing with your plan. One advantage of this is it should eliminate any arguments as to who gets what after you’re gone.
- Talk with your attorney about what you can leave to any members of your family tax free. It isn’t just a case of leaving an amount of money as these could disadvantage them in a big way regarding the tax laws.
Estate planning is not something we do with enthusiasm. It’s one of those things in life that gets put off but too many horror stories litter the court systems following untimely deaths of people who failed to get a plan in place. Don’t do this to your family and make sure you extinguish any fires before they start when you are able to.