There are three things that every estate planning lawyer will tell you. There is a big awareness gap in American awareness about how to prepare your assets for future generations. Your estate planner is likely to advise you that you should plan to be efficient even with modest resources.
This is true as most people with modest means will be unable to pay the prohibitive costs of probate. It is a burden on your family as they are the ones who have to pay the inheritance tax. They end up paying about 3-8% of the value of the estate as taxes. The probate is also a painfully long process. It may take more than a year for the assets to be distributed. That makes the process expensive and not viable.
Be a Stealth Wealth Practitioner
A Revocable living trust is the best way to allocate your assets. It gives you a lot of privacy. Stealth Wealth Practitioners make the best choices with the utmost privacy. You can leave behind your assets to your chosen beneficiaries, without anyone knowing about the bequest. Your beneficiaries might indulge in infighting if they are not happy with your allocation.
Public knowledge that you are leaving behind a large sum of money to your child, it may bring unwanted attention. If you were to unfortunately pass away, and the legacy is not private, it could spell trouble. The child may be judged or taken advantage of by unscrupulous relatives and friends.
Estate Planning Directives
It is responsible to create clear directives regarding healthcare and guardianship once you have a child. The revocable living trust encompasses the instructions regarding your healthcare in the case of incapability. Your appointee can make a decision about your needs and help you. You can have absolute clarity over your life end decisions in this way.
Succession Planning is Integral To estate Planning
Succession planning is another important of estate planning. You must be clear of all legal and tax efficient ways to leave behind your property to your legal heirs. Hire a professional lawyer today to help you understand how to proceed.
You can also make irrevocable trusts and domestic trusts. These trusts are used to gift property to your loved ones while you are alive. This ensures that the ownership of the property passes on to the heir and the property is not in your name at the time of your death. Your loved ones can avoid humongous amounts of tax when you plan well. Just keep in mind that this is a permanent move and cannot be taken back.
Spousal trusts are a good way to keep your assets away from your ex-spouses and creditors alike. It is also irrevocable and you should make these trusts to safeguard your possessions from falling into the wrong hands. After all, an acrimonious divorce could eat away at your finances very rapidly. This move could help you avoid that.
You Cannot Forecast Your Death
All estate planners will ask you to start early. You cannot predict how long you will live. Although life expectancy in America is about 78 years, you never know when your time will come. It is advisable that you make your plan early in life and keep adding to it as the years go by to keep it relevant. It is true that wealth compounds over time, so start planning well in time.
Forecasting Law Changes Is Impossible When estate Planning
Tax laws have changed drastically over the last few decades and are in a state of flux. You cannot predict the changes or even plan accordingly. It is important that you have a professional in your corner. The lawyer can help you keep track of all the changes and change your strategy accordingly.
For example, the exemption limit for estate tax changes dynamically. The gift exemptions for both annual and lifetime gifts also change. You need to be able to make a fair assumption of what could be the changes and make appropriate arrangements to ensure tax efficiency.
Estate Planning is very important for all. It is regardless of age, colour, creed and life stage. You need to protect your hard-earned money from the tax man and from creditors. The best way is to be prudent and plan well in time to avoid leaving the hassle to your dependents after your death. Plan for a long life but do keep a plan for contingencies too!