Why should you have an estate plan? There are many reasons and many goals, including providing for your spouse and children, as well as dealing with a family business, minimizing tax liabilities and naming the people you want to act on your behalf when you’re gone, according to the Brainerd Dispatch in “Wealth Column: Estate Planning Basics,”
So, what do you need? First, you may need a will, which is a basic tool for estate planning. It can handle two very expensive and stressful issues: managing your wishes for your estate and possibly losing hefty sums through unnecessary taxes. However, that’s just the start.
You may also need trusts, depending on your family’s situation. You’ll want to have life insurance policies with beneficiaries. Life insurance proceeds are not governed by the will, so your heirs will receive any funds directly. Benefits from retirement funds fall into this same category. That’s why making sure that your beneficiary designations are up-to-date, is so important.
Working with a team of trusted advisors is productive for most people. Remember that your estate plan touches on taxes and investments as well as your will, power of attorney and health care proxy. Consider these steps to get your entire estate plan in order:
- Gather personal data about yourself and your family,
- Create a balance sheet of your assets and liabilities,
- Review your will and any existing trusts,
- Evaluate all estate tax options, such as the best method of disposing of your share of community property—considering the unlimited marital deduction and the use of tax-sheltered trusts,
- Consider the optimal way to distribute your retirement plan benefits,
- Calculate potential estate, gift and income tax liabilities,
- Determine the availability of liquid assets to meet potential estate expenses and taxes.
An estate planning attorney can work with the information you have gathered to create an estate plan that fits your family’s circumstances.
Resource: Brainerd Dispatch (Aug. 3, 2018) “Wealth Column: Estate Planning Basics”
For more information on asset preservation, tax planning, and estate planning, please visit my estate planning website.