Estate Planning 101

Estate Planning 101

Proper estate planning is crucial to ensuring a deceased individual’s financial goals are met after death. Ideally, an estate plan determines a multitude of issues. These may include the inheritance of assets, tax liability, and the appointment of someone to handle an individual’s financial and medical affairs if the person becomes incapacitated.

There are countless estate planning issues that should be discussed with an attorney. Keep in mind:

  1. Having an estate plan is vital, regardless of net worth. An estate plan has several elements such as a will, power of attorney, living will and frequently, one or more trusts.
  2. Inventory all assets. List all investments, retirement savings, insurance policies and real estate or business interests. Determine whom you would like to inherit your assets and who should handle your financial and medical affairs if you become incapacitated.
  3. Trusts can benefit everyone, not just the wealthy. Trusts allow individuals to place conditions on how assets are distributed upon death. Trusts enable individuals to reduce their estate and gift taxes and to distribute assets to heirs without the costs and delays of probate court.
  4. Discuss your estate plans with your heirs. This may help prevent disputes or confusion among family members in the future.
  5. Federal tax exemptions. As of 2013, estates under $5.25 million are exempt.
  6. Leaving tax-free money to a spouse is not always the best tactic. This increases your surviving spouse’s taxable estate and may result in your children ultimately paying excessive taxes when your spouse dies.
  7. Giving gifts tax-free to reduce your estate. You may give up to $14,000 a year (or $28,000 with a spouse) to an individual.

With so many factors to consider, developing an estate plan can be overwhelming. To ensure that your unique needs are met, consult an experienced and knowledgeable estate planning attorney.

Information provided is of a general nature and does not act as a substitute for a personal discussion with an attorney. Your circumstances may create different legal opportunities.