Research reveals that 60% of Americans don’t have a will or estate plan. Do you fall into this category?
If so, the good news is that it isn’t too late.
You can take care of this important step at any time, though it’s smartest to do so as soon as possible. These forms help cover your assets and beneficiaries upon your death.
Not sure how to start? Today, we’re sharing a few of our favorite estate planning tips. Follow these and future generations will thank you.
Ready to learn more? Let’s dive in!
1. Determine Who Gets What
When someone dies, one of the most challenging parts of settling his or her estate is figuring out who gets what. Take care of this step ahead of time to save your family members the headache.
This is where a will comes in.
Without one, the laws of your domicile will determine who gains control of your physical assets. Create one and be as specific as possible.
2. Consider Estate and Income Tax
If they inherit property or money, the government could require that your beneficiaries pay taxes on those amounts. While this can be an unexpected burden, there are ways to get around it.
First, you can designate a charity in your list of beneficiaries, designating your taxable assets there. Then, you can leave any tax-free assets, such as your Roth IRA account, to your loved ones.
3. Purchase Life Insurance
Looking for another way to alleviate the financial losses that taxable assets can create for your loved ones? Work with your estate planner to see what those taxes would total, and purchase a life insurance policy in that same amount.
For instance, say your planner estimates that your beneficiary will owe $250,000 in estate and income tax. You can take out a life insurance policy for that same amount and name that party as the beneficiary. Upon your death, that money becomes available as a tax-free resource.
4. Create Trusts as Necessary
Do you want a portion of your financial assets set aside for a specific purpose? If so, go ahead and put those funds into a trust.
For instance, you can earmark certain amounts to cover your children’s tuition or a loved one’s care. That designated trustee is responsible for making sure the money is used to cover those expenses alone. Keep these trust documents in a secure space, such as the safe deposit box at your bank.
5. Partner with the Right People
This isn’t a step to take on your own. Sure, you can download most of the forms online via estate planning software, but you need an expert by your side. He or she can help you answer the questions in a thorough and accurate way.
This is an important example of how an estate attorney can help.
From drafting your will to mediating litigation issues, estate lawyers are an important piece of this puzzle. Research and find one you trust, with years of experience in the industry.
Estate Planning Tips You Can Use
No one likes to talk about death, but shoving the topic under the rug could leave your family with a huge mess to sweep up.
Take the time to read through these estate planning tips and take action on any points you haven’t accomplished yet. It may be menial and morbid work, but it’s one of the most meaningful things you can do for loved ones!
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