What is estate planning? Do you think it is only for the rich? One of the greatest gifts you can leave your loved ones is an organized estate. The time that you spend now will help your loved ones cope later, and ensure your wishes are carried out. An estate is all the rights, titles and interests that a person (living or deceased) has in any property. Estate planning is the process of planning for the accumulation, conservation and distribution of an estate to effectively and efficiently accomplish tax and non-tax objectives.
So who needs estate planning? Everyone all together now:
WE ALL NEED ESTATE PLANNING!
Nicely done. Yes, the answer is just about everyone. Although the planning may vary based on the overall wealth and intentions of individuals, some degree of planning is required regardless if you are a prince or a pauper… or somewhere in between. The recent article in the Capital Gazette, titled "Estate planning, it's not just for the rich," reminds us of some very simple tasks you can do to get your estate organized. Communication is important when it comes to estate planning and end-of-life decisions. Consequently, you should talk with your loved ones and the executor of your will about your plans and wishes. You should also speak with an experienced estate planning attorney and do the following:
- Get a will. This lets you to decide how your assets will be distributed when you die and (if applicable) who will be the guardian of your minor children.
- Stay up-to-date regarding the beneficiaries of your insurance policies, retirement plans, and other documents. The original article reminds us that beneficiary designations are a very easy way to transfer property, and the designation trumps a contrary designation in a will.
- Create durable powers of attorney, which let you appoint someone you know and trust to make decisions on your behalf if you become incapacitated.
You also should calculate your net worth. If your estate is less than $5.34 million, then your estate will not be subject to the estate tax. If your net worth is more, then you should speak with your estate planning attorney to develop a strategy to minimize or eliminate the estate tax burden. Proper estate planning will make sure more of your estate goes to your loved ones and not to paying taxes.
Reference: Capital Gazette (September 19, 2014) "Estate planning, it's not just for the rich"