Are you getting close to retirement? Do you want to develop an effective estate plan but you are not sure how to start? If your answer to one of these two questions is affirmative, you have come to the right resource. We are all aware how important it can be to come up with the right estate plan, especially when retirement is just around the corner. You need to make sure that your assets are going to go to the right people, as well as that these are not going to be burdened with too many taxes. So, keep on reading and discover some great tips on estate planning.
1 Draw up a will
No matter how difficult it is to think about this final stage of life, you should create a will. This is an essential part of estate planning, as it will decide who will inherit your assets. Apart from real estate, you can name who will inherit non-financial assets – these can include cars, jewelry pieces or other valuable items.
It’s a good idea to consult with a professional lawyer, as such an attorney can help you come up with the best version of your will. You should also know that certain assets cannot be listed in the will; for example, you cannot leave your retirement account or life insurance policy to another party. Instead, you will have to consult with the financial institution in question and see the existent regulations.
2 Create a provision trust to cover expenses
A lot of people are interested in using their existent assets, to meet different expenses after they are no longer present. If you find yourself in this situation, you might want to create a provision trust; this is meant to cover specific expenses, such as college tuition or health care for unique circumstances. As an experienced lawyer will tell you, you can set up some conditions for the provision trust. This will legally bind the trustee, ensuring that your desires are well respected.
For example, let’s say that you want to set a college fund for your niece. You can stipulate that the trust will be released upon her 21st birthday and only upon agreement that it will be used for the said purpose. This should ensure that the designated amount will be used to pay for the college tuition, allowing you to have peace of mind that such expenses have been covered and that her parents do not have to worry about such matters.
3 Consider resorting to tax-efficient strategies
Often, when a large amount of money is left as inheritance, the taxes to be paid are quite significant. The good news is – you can reduce the value of these taxes, by resorting to tax-efficient strategies. Let’s take a practical example to understand what these strategies are all about. You might decide to include one or several charities in your list of beneficiaries; well, you can leave any assets that are usually taxable to such a charity and solve the matter in an instant.
On the other hand, when it comes to assets that are free of estate taxes – retirement accounts, life insurance policies or any savings resulting from estate tax payments – you can leave these to anyone you might want. Another strategy worth considering refers to the taxable estate and assets; what you can do is donate specific amounts while you are alive. If you stick within a certain sum, then you won’t have to worry about taxes. (NOTE: these may be subject to income taxes even if not subject to estate taxes.)
4 Cover payable taxes with a life insurance plan
The fees associated with real estate and other types of assets can reach unbelievable proportions, causing financial difficulties for the inheriting parties. To prevent such complications, you can set up a life insurance plan and to be used to cover the payable taxes for your estate and additional assets.
It’s a good idea to discuss such matters with a lawyer who has experience with estate planning. Together, you can estimate the taxes that have to be paid for your property and assets. You can then move on and purchase a life insurance plan which to cover those taxes. Just indicate the inheriting party (parties) as the primary beneficiary of the insurance policy. There may be benefits to directing these to a trust instead of the individual that you should discuss with your Florida Estate Planning Lawyer. This can be an ingenious move, given the fact that life insurance policies do not require any taxes to be paid (upon collection but may be considered part of the estate for estate tax calculation if not put properly in a life insurance trust.
5 Get help from an estate planning attorney
As it was already mentioned above, it might be a good idea to get in touch with a Florida estate planning attorney. Together, you can work out the specifics of your will and decide whether you want to create a trust. Estate planning lawyers often have both the knowledge and practical experience, to ensure that your needs will be met. Moreover, he/she should be able to incorporate the issues that deal with federal and state requirements.
The estate planning lawyer can also be of great use when it comes to making suggestions to minimize taxes and expenses. He/she can work with your financial advisor to help ensure that your assets will be well-looked for after you are no longer able to. You should review your retirement account and discuss the best choices for life insurance plans. It is also possible to work with an entire team to create an effective estate planning, depending on your actual needs and assets that have to be divided.
A Final Note
The retirement period is also known as the golden age, representing a time in your life in which you are free to do whatever you might want. However, it is also a time in which you will have to decide who is going to inherit your assets. Talking to an estate planning lawyer, you might be able to take better decisions and, at the same time, you will sleep peacefully at night, knowing that you have come up with a plan to suit both your needs and the ones of your beneficiaries.
Guest Article Prepared by Rosemary Jones