- July 22, 2014
- Category: Latest
Any financial advisor will tell you it’s never too early to take a good look at your assets and begin planning your estate. More than ever before, single twenty-somethings are starting to invest in life insurance policies in order to better secure their future families. In today’s financial landscape of seemingly endless uncertainties, having a plan for estate at any age can pay off.
View Death Objectively
Of course, it’s always going to be somewhat uncomfortable to imagine your own passing and create a plan for your possessions and assets. This is often why people prolong their planning process. Luckily, if you can get over the initial uneasiness associated with discussing death and plan ahead of the process, everything will be easier down the road.
Some people may think that estate plans are only for the extremely wealthy. This is not true. No matter how much you’re worth, it will be a lot easier on your family to have a plan in action. To begin with, you should try to take an inventory of all your assets. What exactly should you include in this? Any items of value, including real estate, insurance policies, investments, accounts and inheritable goods are assets. Make a clear outline of who you wish to receive what and the best way to distribute your diverse portfolio of assets. For example, is a will or a trust the best way to go about giving your son his inheritance?
Dispelling Misconceptions: Trusts
Many people associate the word “trust” with huge amounts of money. This is another unfortunate misconception. A trust is simply a legal mechanism that allows for more control over when, how and why money is distributed to trustees. This can lead to less taxation and time in court for your heirs.
You will also want to select someone to handle your financial estate if you become incapacitated. Along the same lines, you must decide who you would like to make medical decisions on your behalf if you become incapacitated. These are hard decisions, and take some time to decide, so don’t rush yourself.
Make Heirs Aware
To prevent confusion or surprise after your death, make your heirs aware of your intentions. The last thing you want is a series of disputes after your death. This can result in heirs losing money battling in court.
Not To-do: Giving Entire Estate to Spouse
Many people take the easy way out and leave their entire estate to their spouse upon their death, deferring the tougher decisions to them. Although this is an effective tactic when it comes to taxes, it can end up causing more trouble for your spouse down the road. If you give your entire estate to your spouse, they will have to incorporate their inheritance into their will. Instead, if you have children, try to account for it in your own will.
There are many ways to get around having your estate heavily taxed; thankfully, your attorney should be well versed in all the ins and outs. One simple nuance for now? If you wish to pay for someone’s medical or educational expenses, you can do so without being taxed as long as it is paid to the institution itself.
If you have life insurance, make sure that you are exceptionally knowledgeable on its terms and conditions. Perhaps unsurprisingly, many people opt for short-term plans that expire as they age, which are typically good strategies. Simply put, there is little need to still have a life insurance plan in place if your children are grown and able to support themselves.
Estate planning is a difficult and oftentimes lengthy task. It may be hard for you to accept and address your will, but having a clear plan set out for you and your loved ones will cause less hardship down the line. By doing so, you can ensure that your loved ones will be taken care of and that your assets will be handled correctly.
Written by Kellie Bertels, an attorney with the firm Bandré, Hunt & Snider, LLC where they are the leading attorneys in Jefferson City MO.
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