Estate Planning Tips

When you go through estate planning, you are trying to prepare for the eventuality that at any time you may leave this world. Estate planning will be able to help provide you with the assurance that your family will be well taken cared of even after you die. It does not matter if you earn a lot or just a little bit above average. It is always important to have a basic estate plan in place. This will help ensure that your family or your chosen heirs benefit from the properties that you have established in your estate and all your efforts will not be put to waste after you leave this earth.

In preparing an estate plan, it usually should be made up of several important elements. This include preparing a will, assigning a power of attorney and, if you so wish, setting up a trust. Early preparation is important in order to keep everything safe and secure in terms of to whom you think your estate should eventually be handed over. A well-prepared estate plan will help prevent your family from getting into problems handling the properties that you may leave behind. Here are some tips that may be able to help you make a good estate plan.

Start an estate plan early. Avoid procrastinating your way into preparing a well-prepared estate plan. Early estate planning can be advantageous in terms of being able to effectively reduce estate taxes since they can work best over time. Early estate planning, even while you are still alive, can help you avoid closer scrutiny by the IRS since they tend to look closely into estate-reduction activities that are done just shortly before death.

Effective estate planning involves different parties. Even if you are the owner of a certain estate, you may need the input of your future beneficiaries as you try to make your plans. You may need to discuss everything with your family as well as with your financial advisors on how to go about estate planning in a way that would be more beneficial on your part. Sharing your plan and discussing it with everyone involved will help keep everything in order and may even help in preventing possible quarrels among your beneficiaries.

Make sure that you are able to draw up a will. Without a will, it would be more difficult for your family or beneficiaries to have control over the properties that you have left behind upon your death. It can even be more costly, since dying “intestate” or without a will usually lead to probate where the courts will have the authority to decide how best to distribute the property. This will also be an additional stress to the life of the family that you leave behind.

When doing your estate planning, you should aim to reduce applicable taxes on your estate as much as possible. Estate taxes can cover as high as 50 percent of your total taxable estate, a big burden that could eat up a sizable value on your properties. You can avoid high estate taxes by setting up a trust for your beneficiaries.

A proper use of trusts can greatly help reduce the tax burden on your estate by minimizing the taxable estate amount. You can also set up certain life insurance and retirement plans for your beneficiaries since this can also help in further reducing your estate value and yet provide future income for your chosen beneficiaries.

Make sure that you also make a part of your estate liquid, or easily convertible to cash, to help pay for possible costs and bills upon death.

 

Posted by Ardent Editor on Mar 23 2007 in Estate Planning

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