Estate Planning Tips
No matter how great your lawyer is helping you to document and legalize your will and estate plans, you will have work to do. As a result, you will need to document all assets, accounts, and items of inheritance to be formally documented.
Make a list of all your assets: Be sure to make a list of your assets that includes everything you have of value. Assets are everything from tangible items like your house, cars, and jewelry to intangible ones like stocks, bonds, and life insurance policies. Having this list in front of you will give you a clearer picture of your estate and help you decide how you would like it distributed once you are gone.
Find the paperwork for your assets: Just as important to list all of your assets and their values before writing the living trust or will, be sure that you have all the paperwork - titles, deeds, stock certificates, life insurance policies, etc. - in order and ready to hand over to the attorney that will be preparing your living trust. Having all this ready will enable your attorney to get a running start as your assets will need to be transferred to the trust to "fund" it.
Choose beneficiaries: You will have to name beneficiaries, those who will receive assets upon your death, so plan on who should get what before you sit down to write the will or living trust. Beneficiaries can include family, friends, or organizations (including charities). Keep in mind that if you have named beneficiaries on insurance policies, retirement, or savings accounts, these may conflict with your plans regarding the living trust. Be sure to let the attorney know of these potential trouble spots to avoid legal fights among beneficiaries after your death.
Choose a Successor Trustee: With a living trust, you will name yourself as the trustee, so you continue to have control over your assets during your lifetime. Your successor trustee, though, will pay your debts and distribute your assets according to your instructions upon your death, so be sure to choose someone you trust. Moreover, in the case of incapacitation, your successor trustee would also be the one to handle your affairs. This can also be your assigned Power of Attorney.
Choose a Guardian for Your Minor Children: Although you cannot designate a guardian for your minor children through a living trust, you should still consider who you would want to take care of them in case of your death. You can include this information in a "pour-over will," which also provides the distribution of any assets acquired after the creation of the living trust but before your death of any assets inadvertently excluded.
If you plan to leave a portion of your assets to a designated charity or organization, it is important to collect the appropriate information to ensure that it is given to the right organization.
Using Life Insurance in Estate Planning
Life Insurance serves as a source to pay death taxes and expenses, fund business buy-sell agreements, and fund retirement plans. If sufficient insurance proceeds are available, and the policies are properly structured, any income tax on the deemed dispositions of assets following the death of an individual can be paid without resorting to the sale of assets. Proceeds from life insurance that are received by the beneficiaries upon the death of the insured are generally income tax-free.
Estate planning is an ongoing process and should be started as soon as an individual has any measurable asset base. As life progresses and goals shift, the estate plan should shift in line with new goals. Lack of adequate estate planning can cause undue financial burdens to loved ones (estate taxes can run as high as 40%), so at the very least a will should be set up - even if the taxable estate is not large.
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