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Estate
planning, the process of planning how to preserve your assets for your
heirs, is not just for the very wealthy. Everyone should engage in some
form of estate planning. After
working hard for many years, building up a business, and accumulating
assets, you should make sure that those assets will not be unnecessarily
used up but are preserved for your survivors.
Here's a basic guide to wills, trusts, and other estate planning
tools.
An
Overview:
What
constitutes your "estate"? Essentially, it includes everything
you own at the time of your death minus your debts. Occasionally, rules
can apply which may bring back into your estate assets you've given away,
or thought you'd given away.
Taxation
considerations for your estate will vary depending on factors such as
where you live and the total value of your estate. That's why it's so
important for you to speak with your accountant to determine the most
appropriate way for you to establish an estate plan that works for you.
In
addition to the two primary estate planning tools - wills and trusts,
there are other important tools and documents you should consider:
Last
Will and Testaments
The
will is the backbone of good estate planning therefore it is essential
that you obtain competent legal help in drafting a will. A will that is
poorly drafted or does not dot every legal "i" and cross every
legal "t" can be the cause of endless trouble for your
survivors. Many people believe they do not need a will yet we believe them
to be one of the most important documents you will ever create.
Life
Insurance
The
main purpose of life insurance is to provide for the welfare of survivors.
But life insurance can also serve as an estate planning tool. For example,
it can be used to finance the payment of future estate taxes or to finance
a buy-out of a deceased's interest in a business. It can also be used to
pay funeral and final expenses and debts.
Trusts
A
common misconception is that trusts are only suited for use by the very
wealthy. That is just not the case today. People of a wide variety of
income levels use them as estate planning tools. Trusts are complex and
costly to set up and run, requiring a higher level of services from an
attorney than wills. They are useful in accomplishing various estate
planning and financial planning goals. Trusts can be used for many
worthwhile purposes, some of which are listed below:
-
Give property to
children.
-
Reduce estate
taxes.
-
Leave assets to a
spouse.
-
Provide for life
insurance used to pay estate tax.
Your
accountant, together with your attorney will be able to advise you if a
Trust is a viable proposition for you.
Post-Mortem
Letter
When
you pass away, will anyone but you know where your tax records and
supporting tax documents are located? How about your important documents
such as deeds, titles, wills, insurance papers. Do these people know who
your accountant/ your lawyer/ your broker is? By failing to leave your
heirs this information, it will cause a lot of headaches and may also
result in additional taxes and costs being incurred without the
appropriate documentation.
We're
glad to discuss your needs for life insurance and put you in touch with
qualified insurance agents. |
