By taking the necessary step of creating a will, you’ve already achieved something that half of all Americans have yet to do. However simple it may be for protecting your assets and successors, there are additional steps you can take in order to ensure comprehensive estate planning – such as living trusts, powers of attorney for finances and health care directives. Ultimately crafting an inclusive plan is essential at this vital stage!
An estate plan is an essential part of any individual’s legacy, providing comprehensive instructions for how your assets should be managed in the event you are unable to make financial or health care decisions. Taking this important step can save significant money and hassle down the road – both for yourself and those who inherit from you! To ensure a successful planning process, consider these four components:
How Children or Grandchildren Impact Your Estate Planning
Establishing an estate plan is a critical step in protecting your loved ones after you have passed. In addition to appointing guardians for minor children, consider assigning conservators who will manage any assets left to the successor(s). Alternatively, use existing beneficiary designations such as transfer on death (TOD) accounts or wills which can instruct precisely where these items should go upon passing.
Reduce Probate and Increase Privacy
An estate plan that incorporates a living trust can streamline the administration process for your heirs. In contrast, with only a will, probate must be utilized upon your death. Information disclosed in probate court becomes public record, including the terms of your will and your assets, which can compromise your privacy. Probate can also be quite costly. Even an uncontested probate may take over a year to resolve, and legal fees and court expenses can quickly accumulate. Consulting with an attorney to develop an estate plan prior to probate can help mitigate these expenses and maintain your privacy.
The Importance of Including Digital Information in Your Estate Plan
With more and more of our lives, both business and personal, conducted online these days, it’s essential to think ahead about how your digital affairs will be managed if you become incapacitated or pass away. Establishing a power of attorney is an important step that can provide family members with access into accounts such as investments or banking so they are not left navigating the complexities alone after death. Meeting with an estate planning attorney ensures all pertinent information regarding passwords and other necessary documents for managing one’s financial life posthumously has been securely stored in order to make knowledge transfer easier during this difficult time.
How the Size and Location of Your Estate Can Impact Your Estate Planning
The federal estate tax exemption size was doubled to $11.2 million for a married couple by the Tax Cuts and Jobs Act of 2017. As a result, you may not have to pay federal taxes on your estate unless it exceeds $11.2 million. Nonetheless, you may still be liable for state-level estate taxes based on your place of residence. Presently, there are 17 states and the District of Columbia that enforce some type of estate or inheritance tax.