6 Parts Of Your Estate Plan You Should Review Now
According to Forbes, the six parts of the estate plan to review right now include:
Power of attorney and health care proxy: Ensure that someone trustworthy will take the financial and medical decisions for you. If your current documents are outdated, execute fresh ones as the “stale” documents may be difficult to use if they are needed. Remember these documents are used if you are alive. When you die, the power of attorney and health care proxy are no longer valid. They die with you. That is when your will comes into play.
Evaluate your will: Confirm who is the executor of your estate. This person will attend to your affairs after you pass, probate your will if necessary, and file income and estate tax returns. If you have minor children, you should name a guardian for them in the will. For both your executor and guardian, you should also name a back-up.
Review your trust: Identify who will receive the assets upon your death. Perhaps you want to provide an income string for them instead. Or, you may want to leave distributions to them at the discretion of an independent trustee. If your beneficiaries are young, consider holding any assets for them in trust until they are old enough to handle the money themselves. Look at who will serve as trustee after you’re gone. Consider whether this person will administer the trust based on your wishes.
Fund the trust now: Funding the trust now saves money and makes administration easier for your successor trustee. Without it, court authority will be needed to access your assets. Petitioning the probate court can be a costly and time consuming endeavor.
Update beneficiary designations: Review designations on your life insurance policies and accounts that name a payable on death beneficiary. Remember if you have a joint asset like a joint bank account, that asset will pass to the surviving joint owner. Individuals sometimes undo their estate plan by incorrect beneficiary designations. They name someone as a beneficiary with “instructions” on what to do with the monies. That rarely works out well. Do not rely on someone to “do the right thing” by your loved ones.
Take advantage of estate tax opportunities: The current exemption allows you to gift more assets while using less of your estate tax exemption amount. The lower value of assets combined with the current estate tax exemption amount of $11,580,000 means that you can gift more assets while using less of your estate tax exemption amount. Also, low interest rates can be used for estate planning techniques like grantor retained annuity trusts and intra family loans to further take advantage of these gifting strategies.
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