A Properly Executed Estate Plan is One of The Best Things You Can Leave Behind.
Procrastinating
about making a decision over your estate would not help anyone. For one, it can
be costly for those who will inherit your assets. In addition, it can also
cause tension and conflict between family members, especially if some feel that
they were not given their fair share.
To make sure
the right people inherit the right assets, you need to create an estate plan.
This can help you provide the maximum protection for your loved ones and ensure
that your financial goals for your family will be met even after you die.
Unfortunately,
about 120 million Americans do not have a carefully conceived estate plan in
place. As a result, their families are left to suffer the consequences of their
inaction. If you want to save your family from such predicament, you really
need to take care of things to be able to leave a positive legacy behind. How
do you do it? Here are some suggestions that you may find useful.
Make a will. You need to make a will if
you want to make sure that everyone gets their rightful share of your assets. Otherwise,
the applicable laws will determine how your assets will be distributed to your
surviving relatives. Now, if you are thinking about leaving all your assets to
your spouse to avoid paying the necessary taxes, you may need to rethink your
decision since this will only increase your surviving spouse’s taxable assets.
As a result, your children may be left to pay higher estate taxes after your
spouse’s death.
Put a trust in place. You can create a
trust to specify how and when you would like to distribute your assets to your
beneficiaries without the cost and delay of a probate court. It can also reduce
the amount of gift and estate taxes your beneficiaries have to pay.
Discuss your estate plan with your heirs.
Don’t skip this step since it can help prevent potential conflicts after you
are gone.
Update your documents. You should make
it a point to review and update beneficiary designations after marriage and/or
divorce, and in cases when a beneficiary predeceases you. Do not assume that
your
divorce will eliminate the rights of your ex-spouse to your retirement
funds and insurance proceeds. It won’t. And this is precisely the reason why
you need to update your beneficiary designations after each major life event.
Use tax-efficient strategies. You can
reduce the amount of estate and income taxes your beneficiaries have to pay by
leaving your tax-free assets (Roth
retirement accounts, after-tax savings, life insurance) to your
beneficiaries and your taxable assets to charitable institutions, and by gifting
up to $13,000 (tax-free) to your preferred beneficiaries while you are still alive.
You may also help your beneficiary or beneficiaries offset the cost of estate
and income taxes by leaving them the proceeds of your life insurance. Since
this will be tax-free, they can use it to pay for the necessary taxes.
With a
properly conceived estate plan, you can leave a positive legacy to those you
love most. Isn’t that what most of us want??
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