Nobody likes to think about what will happen after they pass away. Estate planning, however, is a very important part of planning for your family’s future. Here are six estate planning tips to help guide you to a successful plan.
1. Understand Estate Taxation
The federal government has its own rules for how your estate is taxed. These rules change from time to time due to new legislation. The most current information on estate taxation can be found on the IRS website. Knowing these laws will allow you to plan accordingly for your heirs.
2. Meet with an Estate Planning Attorney
Meeting with an expert in estate planning can be well worth the money when creating your estate plan. An estate planning attorney can guide you to make the best decisions for your personal situation. Not only can they draft wills and trusts, but they can point you towards additional resources such as financial planners.
3. Keep Your Beneficiaries Up to Date
As a best practice, take a look at the beneficiaries on all of your investment and retirement accounts at least every five years. People are born, people die, and family relationships can change over time, so it is imperative to look at your beneficiaries periodically to ensure accuracy.
4. Avoid Probate If Possible
Probate is the legal process of a court proving your will. This process can be very time consuming and expensive, so using tools such as adding beneficiaries to all of your accounts and utilizing a revocable trust can eliminate the headache for your loved ones of going through this court process after you die.
5. Know Your Wealth
Knowing your wealth is important because different levels of wealth have different estate planning needs. Having a good inventory of all of your assets and their respective values will allow you to determine whether a simple will is sufficient or if you may need more complex estate planning tools such as a trust.
6. Make smart moves while you are alive
There are many things you can do to reduce your estate while you are alive, therefore reducing the amount of estate tax your beneficiaries will have to pay. According to Motley Fool, gifting to loved ones while you are living allows you to reduce your estate tax bill and also do something nice for your loved ones.
The conversation regarding life after your death may be challenging. Knowing your family and assets are taken care of if you pass away, however, will bring you great peace of mind. Utilizing these tips can lead you to an estate plan that is tax-efficient and properly reflects your intent for your assets.