It may seem far-fetched, greedy, or even pessimistic, but now is the best time to start planning over what to do with your assets when you die. However, estate planning can seem expensive, time-consuming, and tortuously difficult to plan and execute. With his simple guide, we will help you cover an overview of the estate planning basics that are necessary for you to know.
What is Estate Planning?
Estate planning is, according to financial glossary website Investopedia, “The collection of preparation tasks that serve to manage an individual’s asset base in the event of their incapacitation or death[…].” That is, families or individuals take important steps to arrange and distribute their property that meets the family’s own financial needs and goals, while complying with federal and state tax laws that must also be met.
Why is Estate Planning Important?
By promptly planning your estate, you will protect your assets, create a financial safety net for your family to enjoy after your death, and establish a legacy for the future. Let us break down each of the four benefits of planning your estate:
Asset protection: Trusts like Spousal Lifetime Access Trusts, offshore trusts, and even charitable gifts and donations to individuals or companies can help lend your voice —and your will— on the way your assets are to be run after death.
Tax Conditions: As an example: in 2013, the tax-free estate exemption was permanently set at $5.25 million; anything over that amount could easily run higher than 40% for your estate. For these and other state and federal restrictions, estate planning features different strategies to reduce your estate taxes and prepare your family. Examples include: donations, gifted assets to corporations and limited-liability companies, and paying loans, scholarships and grants for foundations.
Future Legacy: In different states, trusts can continue for many generations, granting well-established estate planners the opportunity to create dynasty trusts. Others opt to create a legacy in their community, alma mater, or any other not for profit organization.
Types of Estate Planning Documents
Estate planning basics go beyond wills and trusts. There are many documents that will help you and your family navigate these legal waters without conflicts or drama. Important documents include:
Advanced Health Care Directives
Living Trust
Beneficiary Forms
Powers of Attorney
Living Will
Inventory of Assets
Funeral Arrangements
For these and other questions regarding elder law and estate planning, Mindy Felinton can help you cover the estate planning basics with enough precision, maturity, and authority that you and your family need in such a difficult time.