Many people devote more time and attention to amassing their estates and enjoying the fruits of their labor than in planning for its ultimate disposition. In the event of your death, have you considered the choices that must be made concerning your final affairs? Death is a topic that most individuals are uncomfortable talking about. But, with a little planning, you can maintain control and ensure that your estate will be settled consistent with your wishes.
Here are six basic estate planning steps that can help you gain control of the disposition of your estate and avoid some unnecessary pitfalls:
- Keep good records. When you die, the first thing your heirs will have to do is sort out your financial affairs. You can help them by maintaining good records and letting them know where to find your will, insurance policies, investment account statements, and other important documents.
- Maintain an updated will. A will is, perhaps, the most basic legal estate planning document.
- Plan for lifetime needs. A will deals with your estate after you die. However, incapacity during your lifetime could affect your ability to make financial and healthcare decisions. A durable power of attorney allows you to designate someone to make financial decisions on your behalf in the event of incapacity. With a living will , you spell out your wishes regarding the use of life-sustaining measures if you become incapacitated. A durable power of attorney for health care, sometimes referred to as a health care surrogacy, designates an individual to make certain the instructions of your living will are carried out.
- Take advantage of the unified credit system. Individuals with large estates, a planned giving strategy using this exclusion may be an attractive way to reduce the taxable estate.
- Use the annual gift tax exemption.
- Make proper life insurance arrangements. Life insurance proceeds are generally included in the gross estate of the insured policy owner for the purposes of calculating estate taxes. An irrevocable life insurance trust may remove the insurance proceeds from any potential estate tax exposure, which can considerably increase the amount your beneficiaries ultimately receive.
Please contact Sandy for a no-obligation comprehensive financial or estate planning review at 330-668-2300 or 800-686-1133.