Monday, November 24, 2014

Estate Planning Is the Most Important Financial Planning You Will Ever Do

A lot of individuals assume estate planning is simply about minimizing the estate tax. There actually are many other critical parts to estate planning. Regardless of whether your estate is going to owe tax or not, for the majority of people, estate planning is still  essential and ought to be planned and maintained. 

A Few Reasons to Create an Estate Plan


  • Select a guardianship for dependents
  • Have monetary security for your loved ones
  • Reduce estate and income taxes
  • Pass on real estate to specified beneficiaries
  • Streamline management of your estate
  • Keep the details confidential and avoid probate


What Resources are Required?



Estate planning may be easy or complicated, being dependent on your circumstance and wishes. For many people a simple estate plan is the only thing that's needed and can deliver considerable benefits. A visit to your estate planner usually involves reviewing the following information and discussing your plan specifics.

  • Go over existing wills or trust instruments
  • Catalog of all possessions, investments, financial obligations, etc.
  • Be aware of how each property is titled
  • Establish who will be left your estate
  • Outline any special requirements of the beneficiaries
  • Select the individual to handle your affairs
  • Consider giving to specific charities
  • The amount of health-related treatment you desire
  • Precisely what memorial arrangements you desire

Process Involved



There are primarily 3 steps associated with setting up your estate plan: planning, documents, and execution. Every phase consists of different tasks that may necessitate the services of a CPA, legal professional, fiduciary, insurance professional, and investment specialist.

Design includes speaking with experts to detail your wishes and objectives and to obtain an understanding of the level of planning required. Documentation needed requires a legal practitioner to prepare legal instruments including a will, trust, durable power of attorney, and medical power of attorney. 

Execution entails entitling property and inheritor designations to correctly fund your plan of action, keeping track of changes, implementing your instructions, satisfying requirements, and compliance.

Professional Estate Administration


Managing an estate must commence before you pass away by detailing what you wish to take place following death or incapacitation. The following individuals are normally involved with the administering of an estate to execute your directions.

  • A personal agent to prepare memorial service plans and execute your will.
  • A fiduciary(s) to administer any trusts and take care of associated assets.
  • A legal professional to help the personal rep with the probate procedure.
  • A Certified Public Accountant(CPA), like the ones at Padgett Business Services, to put together estate and tax returns and offer financial guidance.


Income Taxes Involved


There are 5 different taxes that could directly affect your estate: income tax, gift tax, estate tax, generation skipping tax, and state inheritance tax.

  • Income tax involves earnings, regardless if it is obtained by an individual, a trust, or an estate. Recognizing when a trust or estate needs to disperse income may substantially minimize taxes. 
  • Gift tax relates to the value of an estate, or rights to this kind of asset, or rights to such asset, transferred while you are alive. Figuring out the best ways to use annual and lifetime exemption amounts and appraisal discounts may substantially decrease the gift and estate taxes. 
  • Inheritance tax applies to the worth of every property in your taxable estate at the time of your passing. Also simple preparation can save considerable amounts of Federal and State taxes. 
  • Generation skipping taxation relates to the value of all property passed on to more than 1 generation below you. This obligation is in addition to the estate tax. 
  • State estate or estate tax concerns the citizens of those states that tax the assets of the beneficiaries on the value of the asset passed on at death. Family mechanics and inheritance tax statutes are constantly fluctuating, we can help you keep pace.

Preparation is the secret to managing your affairs, managing resources, and reaching financial security. A visit to your estate planner should result in an education on what the process is and what it will do for you and your surviving family. The following is a check list that you should keep with you when you visit your estate planner. It's your responsibility to make sure you are being taken care of and all your planning is complete.

  • Minimize estate, gift, and income taxes 
  • Offer an orderly transference of assets.
  • Designate guardianships for children
  • Find out ways to make use of life insurance.
  • Comprehend complex probate laws
  • Discharge your desires and wants.
  • Recognize how titles impact estate transference
  • Assist with management of your estate.
  • Know the best ways to make the most of a will, trust, POA, etc.
  • Help shield family from creditors.
  • Retain more of your resources for your family
  • Provide for unique needs of dependents.
  • Handle the continuing needs of your Family.


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