Tips for Estate Planning

When it comes to the topic of estates, Stephen White, regional leader of wealth planning for BMO Wealth Management, sums up the importance of having a plan. “Spending a little time to get all your affairs in order is one of the best gifts you can give your family,” he says to U.S. News.

Estate planning can seem to be an impenetrable, looming task. Thankfully, there are some tips on how to make the process quicker and more comprehensive.

Tally your assets

The first step, according to Investor’s Business Daily, is to tally up your assets in order to find out exactly what you have. This includes possessions, bank accounts, life insurance policies, businesses and real estate. Knowing all that needs to be addressed will help immensely during the estate planning process, as certain assets — like a family business — require special provisions.

Determine beneficiaries

The next step is to decide where your various assets will go. Investopedia, contributing an article for Forbes, offers a few tips. If you want some of your assets to cover specific expenses like college tuition or other special needs, you may want to create a trust for that purpose. Doing this designates the person you are giving the money to as the trustee and makes the money available only for a specific purpose.

Outside of special cases, it’s important to remember the beneficiaries could end up owing estate or income taxes on certain inherited assets. As a solution, Investopedia suggests you might consider leaving taxable assets to charities, and leave tax-free assets — like Roth retirement accounts and life insurance — to your other beneficiaries. Another possibility is gifting amounts of your assets to your beneficiaries while you are alive, which is free from taxes up to a certain amount.

Designate an executor

Once you have listed your assets and decided where you would like them to go, it is time to designate an executor (or executors) that will carry out your plan for the estate. Typically, this person is a family member, though a professional attorney may be the best choice to handle this responsibility, depending on your assets. On this note, Fidelity Investments urges you to be transparent with your beneficiaries to avoid situations like an adult child not being comfortable serving as a trustee.

Speak with an attorney

Once all of these affairs are lined up, Investor’s Business Daily highly recommends finding an attorney to draw up your will and other estate plan documents. The publication points out that unless your estate is very simple, consulting with an attorney that specializes in estate planning is important due to many possibly hidden nuances during the document drafting process.

Planning your estate is a crucial step to ensuring that your assets will not be dragged through an extensive court process or debated by your family. Following these tips can help provide direction during the planning process.


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