Yes, Estate Planning is For YouMay 04, 2022
Most people view estate planning in the same way they view a root canal: Put it off until the pain is too great to ignore any longer. Also, those with little income or net worth believe that estate planning doesn’t apply to their situation. But estate planning is much more than just the allocation of cash, real estate, and other assets. There are other things to consider, too.
There are many errors that occur again and again in estate planning. Avoiding these mistakes is half the battle.
- Estate planning is a little like completing a tax return. No one really wants to do it. But it’s so important to push your reticence aside and get it done!
- Not paying attention to the conflicts that exist within your beneficiaries and estate plan. For example, if your will declares that your spouse receives your retirement account, but a former spouse’s name is still listed as the beneficiary, this could prove to be a big challenge.
- Not having adequate life insurance. Life insurance can be a great estate-planning tool for the affluent, but life insurance is vital to those with low income as well.
- Consider how your family will survive financially if you or your spouse were to die unexpectedly.
- If you have significant wealth, you might consider using life insurance in conjunction with an irrevocable trust for tax purposes. An attorney that specializes in estate planning can make recommendations based on your unique situation and explain the details.
- Creating a plan that lacks flexibility. Creating a plan with a little wiggle room will allow your heirs to take advantage of any new laws as well as use the assets in the most advantageous fashion.
- Not gifting assets. Up to $14,000 can be gifted to each beneficiary per year without incurring a gift tax (this can change every year so be sure to check out the current gifting amount). This can be a great way of reducing the taxes imposed on your estate at the time of your death. You also have the chance to see how well your beneficiaries can manage your assets.
- Additionally, you have the advantage of being able to witness someone enjoying your assets. You can’t do that after you’re gone!
Estate planning isn’t the most enjoyable activity, but it is likely to be one of the most important things you do for your family.
Everyone should have a basic estate plan that spells out their wishes. If you own one asset, you have an estate. Never think that estate planning isn’t for you!