 |
Tags: finance, estate plan trusts, basics of estate planning
 They say that two things are assured in life—death and taxes. However, many would add, and I’m sure those who have experienced it would agree, that the struggle to figure out who gets what after you pass away is also a sure thing. Understanding the basics of estate planning can make the transfer of your assets to your loved ones less painful so that you can rest easy—no pun intended.
“Why do I need to do estate planning when I really don’t have much?” is usually the common question asked by a lot of people. My answer to that is it doesn’t really matter whether your estate is large or small. If it's small, you simply state who will receive your things after your death; if it's large, you can create ways in preserving them for your beneficiaries while reducing or delaying the amount of tax payable upon your death.
advertisement
In estate planning you can designate someone to manage your assets, pay your last debts and handle the distribution of your assets and even make health or personal care decisions for you should you become incapacitated. Estate planning ensures that your family and financial goals are met and gives you greater control as to who will inherit your things after you’re gone.
As to what things are included-it’s basically all you own. This are things held under your name either alone or held jointly. It could include, but are not limited to bank accounts, real property, stocks and bonds, furniture, cars and even jewelry. Life insurance proceeds as well as retirement accounts and payments that are due to you are also added into the mix.
The total value of your assets is equal to the “fair market value” less debts, and is the basis of whether taxes would apply or not. Estate planning includes several elements. Dying without a will or dying "intestate" can be costly for your heirs and leaves you no say over who gets your properties.
A will is a legal document that tells the world exactly who gets what when you die. You can names the specific individuals or charitable organizations who you want to receive your assets either by outright gift or in a trust. You can also nominate an executor who will then be appointed and supervised by the probate court to manage your estate; pay your debts, expenses and taxes; and distribute your estate according to the will instructions.
And more importantly, you can also nominate the guardians who will take care of your minor children until they reach the age of majority. A power of attorney authorizes someone to act on your behalf in a legal or business matter. This is slightly different from a medical power of attorney or health care proxy.
The latter is given to someone you nominate giving them the authority to make medical decision for you when you become incapacitated. This includes even end of life decisions. If you like you can also create a living will which will set out directives concerning your end of life decisions.
If you want to reduce the taxes payable when you die and to distribute your assets to your heirs without the cost, delay and publicity of probate court then setting a trust is the thing for you. Trusts are legal mechanisms whereby a specific property asset is managed by one person, known as a trustee, for the benefit of another, the beneficiary.
It lets you place conditions on how and when your assets will be distributed upon your death. However, when estate planning, always remember that both federal and state laws will apply so I recommend getting legal advice if necessary. Estate planning involves people—you, your family, and other individuals. Discuss your estate planning with everyone concerned to prevent potential disputes or confusion.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
Share this article
You may reprint this article in its entirety on your web site, newsletter or ezine, providing you leave the About the author sections intact. You may not alter the contents.
|
|
