Estate planning varies substantially between individuals and is influenced greatly by a person’s goals. Each individual also has a unique situation as well as a background to consider. Two individuals with similar kinds of assets are worried about protecting property from future elderly care centers that might sound like they have similar estate plans. If one person is a disabled veteran, while the other has no military service though, estate planning between the two can be substantially different. When it comes to estate planning, countless important estate planning issues should be considered.
# 1 – Decide On Your Estate Planning Goals
Each person should assess his or her goals when deciding on what he or she would like to achieve with an estate plan. If the main goal is to make sure that a spouse inherits assets and can make choices after the individual becomes incapacitated, a plan involving a last will and testament and powers of attorney might be all that is required. If the primary objective of an estate plan is to guard against future liabilities, trust planning might be critical.
# 2 – Consider The Nature of Assets
Assets are the second issue a person should consider. In many situations, assets can have more of an impact on the estate plan than an asset’s values. Remember, each type of asset introduces varying levels of tax liability to the estate planner while they are alive as well as to beneficiaries. Each kind of asset introduces various assets while a person is alive and these risks must be assessed against tax liability.
# 3 – Fully Consider Beneficiaries
A critical issue is beneficiaries. It’s a good idea to consider various issues about beneficiaries including the number, relationships, and needs of each beneficiary. For estates that carry taxable inheritance, the number of beneficiaries can lower the taxes owed to each person. The connection between individuals to beneficiaries also plays a substantial role in deciding how an inheritance is taxed. With adequate planning, intentional gifting can lead to substantial tax savings for a person’s estate. A beneficiary’s needs should also be considered. If a beneficiary is disabled or in other situations like on public benefits, suffering from an addiction, or bad at managing money, the individual’s inheritance should be tailored to fit his or her needs. Hoping that a beneficiary will act appropriately can be a dangerous strategy and can even lead to the loss of assets owned by the beneficiary.
# 4 – The Advantage to Creating a Revocable Trust
Creating a revocable trust can prove to be simple and inexpensive. Revocable trusts refer to trusts that you can revise at any time. As a result, these trusts are not protected from creditors or outside of an estate.
Not only do revocable tests help in conventional ways, they also prove advantageous if you want to keep an asset separate from your spouse. If you’ve established a trust of this kind and transfer all separate immune property to the trust, this can help to maintain the separate nature of the assets by functioning as a separate independent accounting entity that avoids commingling and that makes evidence of holding onto separate property easier. This is because revocable trusts own assets classified as a separate legal entity. A person can monitor these assets to make sure they are separate property assets. A person can also document the source of these assets. Additionally, these trusts can be operated in a manner independent of personal assets.