Estate Planning Tips

Estate planning is something that is often brushed aside. But planning ahead could put your loved ones in a much better position, as it is a crucial task for long-term investing and creating a secure financial future. For instance, if taxes are an issue for you, your estate planning can limit the amount of money your beneficiaries owe. Below are a few tips to guide you through your process.

Declare Who Gets What. Defining your assets is crucial to allocating your wealth. If you fail to create a Will, the government determines who inherits your assets. This also incudes non-financial assets, such as jewelry or cars.

Choose How it Should Be Spent. You can choose the way that your trust is allocated to your parties. You can set up a plan that specifically dictates where funds can be allocated, such as a college fund or purchasing a home.

Minimize Estate and Income Taxes . If you anticipate your beneficiaries being taxed on assets you leave for them, there are some ways you can minimize taxation.  For example, you can leave taxable assets (such as Roth retirement and life insurance) to charities. You may also gift assets to you beneficiaries if it’s under $13,000 for each recipient, you will not be taxed.

Offset Taxes with Insurance. If your beneficiary is going to be taxed on their inheritance, you have the option to offset that money (taxes owed) to be contributed to their life insurance policy.

Work with an Estate Planning Team.  It is important to consult estate-planning professionals when planning your Will.  Some of these include: an estate-planning attorney who can help with design and creation of a trust, a tax professional who can help minimize overall taxes, and a financial advisor who can help you with planning your investment portfolio. If you are working with a team, make sure that they communicate with each other so that everyone is on the same page.

Now that you understand the fundamentals of estate planning, there’s no reason why you shouldn’t get the ball rolling. You’ve worked hard for your assets, so it’s important to make sure that they end up with the right people (or charities) when you’re gone. Follow the tips above to get a head start!