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Keep Your Money In The Family

The inheritance you leave could be eaten away by taxes or given to the wrong person(s).  This week, I will try to provide tips to avoid this.  


Everyone should have the basic estate plan components.  A life insurance policy, a Will, a designation of agent to control disposition of remains, a durable power of attorney and an advance directive are all important aspects of an estate plan that should be established at the beginning of the planning process. 


The prospect of estate planning can seem overwhelming, but don’t put it off. Having an estate plan is crucial to ensuring your money and assets go to your intended heirs.


The good news is your family probably won’t have to worry about paying estate taxes. In 2023, you’d have to die with assets exceeding $11.7 million (twice that for a couple) to trigger the estate tax.  You should be aware, there is a proposal in Congress that would cut the exemption in half.


Most estates would still be exempt from this tax even with a $6 million exemption though. The estate tax impacts a tiny percentage of the population,  While some people worry about how the estate tax affects family farms and small businesses, provisions in the law help shield them from big tax bills.


The bad news is that avoiding estate tax is only one of your worries.  Heirs may be responsible for paying federal income taxes on some assets, such as capital gains, and retirement accounts, and if you don’t plan correctly, your money could end up in the hands of an ex-spouse or creditor.


You want to make sure your stuff goes to the right people. That means everyone can benefit from estate planning.


  1. Have an Insurance Strategy Session.

Life insurance, long-term care insurance, and health care insurance are all important pieces in the advance planning puzzle. Sit down with your spouse and map out your probable needs for the future, including the possibility that one or both of you might require some form of long-term care in the future (as the majority of seniors do). Match those needs with your income. That way, you’ll have numbers on paper, which is a great way to get the ball rolling.


  1. Buy a Box.

That’s right, a single box can make all the difference. By putting all of your essential documents in one, you’ll ensure that everything you need throughout the estate planning process is at your fingertips. As an added bonus, your loved ones will be able to easily retrieve everything they need, should you ever become incapacitated (or when you pass away).


  1. Check your beneficiaries

One way to avoid probate court is to have beneficiaries named for your assets. Some accounts, such as retirement funds and life insurance policies, let owners name beneficiaries who will receive that particular asset.


If your vehicle(s) are paid off, you can utilize the right of survivorship provision on your vehicle title.  Signing this section of the vehicle title can make transferring ownership of vehicles very easy.


A beneficiary or TOD designation trumps anything written in a will.  So, it’s a good idea to review beneficiary information after every major life change, including the birth of children, marriage or divorce.


Additionally, you might want to convert traditional IRA or 401(k) accounts to Roth accounts to avoid tax penatlies.


  1. Make an appointment

Hiring an experienced professional takes an enormous burden off your shoulders and lends confidence in an error-free planning process. An experienced estate planning attorney can look at your insurance worksheet, thumb through the documents in that box, and begin crafting a plan to protect your assets and your loved ones for the future. There’s a lot to think about it, but with an attorney on your side, there’s nothing to worry about.


Your estate plan should never be a “one and done thing.” You should review the plan every five to seven years, to adapt to significant life events, tax law changes, the addition of more children or their changing needs.  It is also important to keep tabs on your insurance policies and investments, as they all tie into the estate plan and can fluctuate based on the economic environment.


When drafting these documents, you should seek professionals who are trained and familiar with estate planning and probate.  The advice they provide will assist you in making the best and least complicated plan. 

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