PrintEstate planning is certainly not something that most people look forward to. However, it is necessary to make sure that everything you have worked long and hard to obtain ends up in the right places after you die. While there are many details that you will need to learn more about regarding trusts, estate taxes and probate, below are ten estate planning essentials that you should consider.
1. Have a will: You should have a will drawn up that stipulates where assets and property will go once you die.
2. Have a living will: Many people today are drawing up living wills. These stipulate medical and health care instructions to be carried out should you be on a life support system. A power of attorney must be named in conjunction with a living will.
3. Review beneficiaries: As your family situation changes over the course of your lifetime, you may need to change the names of beneficiaries not only in your will but in life insurance policies and other documents that list beneficiaries.
4. Child guardianship: If you have minor children, it is imperative that you take time and special consideration when deciding who will take guardianship of your children in the event that you die. This should be stipulated in your will.
5. Trusts: Setting up a trust is actually not an essential, but it is something you may want to consider to maintain greater control over your assets and have your wishes carried out once you die. Trusts will also avoid the lengthy probate process. There are a variety of trusts available.
6. Logistics: It is an emotional time when someone passes away. Such a time can be exasperated when the loved ones of the deceased cannot find important documents, keys to safety deposit boxes, financial statements and other necessary information. It is essential to create a list of where all-important information can be located and give the list to someone you trust.
7. Gifting: Certainly not essential, gifting is a means of giving up to $11,000 away tax-free to each person you choose. This is a way of shrinking a large estate to avoid significant estate taxes.
8. Estate taxes: There are various ways to limit the taxes on your estate, depending on the size of the estate and your family situation. It is worthwhile to discuss the options with your accountant or attorney.
9. The estate-tax exemption: As of 2005 the gift tax exemption (meaning how much can be given to others free of federal estate tax) is up to $1.5 million. Both a husband and wife are each allowed $1.5 million exemptions. This will increase steadily through 2009 and, as of 2010, the federal estate tax will be repealed.
10. Life insurance: If your beneficiary is your spouse, there will typically be no problem with taxes since all assets pass free of estate tax between husbands and wives. However, should the beneficiary be someone other than the spouse, including a child, an Irrevocable Life Insurance Trust may be a good alternative to avoid having the payout become part of your taxable estate.
