Planning for the financial future of your loved ones is an important undertaking, especially if you want to manage how your estate is handled after your death. There are critical elements in the decision making process that will have ramifications on your estate that might be cause for concern, especially on tax issues.
•There may be state and federal taxes on the estate itself, gift taxes, taxes on income from the assets you leave behind, and taxes on the inheritance left to your heirs or beneficiaries.
Estate planning is not as complicated as it may seem, yet it needs to be handled with care and wisdom. First, and above all, you need to take an active role in the research, planning, and the decisions making process.
If you are married, both you and your spouse should be involved. You should understand and respect what each other wants, and make sure that your plan covers what is most important to both of you.
Depending on the amount of assets you have, you may or may not want to spend a lot of money on a professional estate planner, but it may still be a good idea to hire an attorney to help you with your plans.
Some people draw up simple wills or irrevocable trusts to fulfil their ambitions for the distribution of their assets when they die. Others want more elaborate trusts and wills drawn up, so they need the help of attorneys and/or professional estate planners to work out the technical details.
The main thing to consider and keep in mind when planning your estate is that you have options. Whether you plan your estate through a will or a trust, they can always be amended, or redrawn entirely, if you want to make a change in the future, unless you decide to go with an irrevocable trust.
At the time of your death, all of your assets are subject to federal and state tax laws. This is the reason the wealthy, and many of modest means, explore and use every method at their disposal to legally reduce, defer, or totally avoid paying tax on their estates.
Estate planning, in a broader sense, includes all aspects of your financial worth, including cash, real estate, businesses, insurance policies, wills, living trusts, annuities, IRAs, SEP plans, cars, furniture, antiques and collectibles, bank accounts, and any other asset of value.
Of particular importance in estate planning is the manner in which property is held, whether it is held jointly or individually, marital status, heirs and beneficiary disignations, the ages of the heirs, guardianship of minors and the disabled, and who is going to administer the estate.
The importance of estate planning cannot be overstated. Without the proper planning, and execution of your wishes, your estate may be placed in the hands of someone other than the person you want having control of it. If there is no plan, will or trust, it may have to go to probate court, and in a worst case scenario, it may go to the state.