Estate Planning 101: Tips For Planning Wills and Trusts

August 13th, 2013 by

The term “estate planning” is used to describe many end of life planning issues. Your estate refers to the combination of all of your assets and debts including, your house, your accounts and your possessions. Because your estate plan can greatly affect the tax opportunities on what you leave behind, a well-executed plan can put you at ease knowing that your financial affairs are organized for wealth retention or will be properly distributed. Even though this piece of planning is essential for every individual and small business owner, there are many who overlook making the appropriate provisions. Those who die without a will, or “intestate,” could potentially leave a costly financial burden on their loved ones and leaves the future of his or her assets in jeopardy. For these reasons it’s important to discuss with your accountant the finer points of estate planning.

 

Where To Start

Your CPA or small business accountant will generally have a good idea of where to start when it comes to making plans for the inevitable. In order to get an idea of what plans you need to make, it is essential to have an accurate account of your assets. It’s important to take note of your investments, retirement savings, any insurance policies and any real estate or business interests you’re involved with. After you’ve determined what you have to leave behind it is then important to ask yourself who you would like to receive your assets after you’re gone. You will also need to decide who you trust to make financial decisions for you if you should ever become incapacitated. After determining these few pieces of information, it will be easier for you and your accountant to decide which course of action will be the best for you and your estate.

 

Anyone Can Set Up A Trust, Not Just The Wealthy

Though they are commonly associated with the wealthy, a trust is simply a legal document that allows you to control how, to whom, and when your assets will be distributed after you’re gone. There are a few benefits to using an estate as well as offering you greater control. For instance with a trust you are capable of reducing the applicable estate and gift taxes that may apply to your situation, as well as distributing your estate to your heirs without the added costs of going to the appropriate probate court. It may be beneficial to consider the option of a trust when making your final financial plans to insure that your wishes are carried out in an efficient and cost-effective manner. Your CPA can help you determine if this course of action is right for you.

 

Other Issues To Take Into Account

When making your final plans it is important to research and determine if there are any potential disputes concerning the ownership of the property you are including in your will or trust. It may be beneficial to to investigate how your home is owned. A home can owned in different ways and depending on which category your home ownership falls under it can affect whether or not your house will fall under your estate. Along the same lines, if you own a small business it is important to know if you have sole ownership or if you have partners and how this will affect your estate. It is important to talk to your CPA for proper planning. Finally, it is important to make sure the beneficiaries you have designated on any insurance policies or 401Ks are up to date. The designations you have selected for these assets can override any will or trust that you have made.

 

Though no one wants to think about what will happen after they’re gone, it is important to create plans to protect your loved ones from potential financial troubles. Proper planning for your assets will help to insure that there are no legal or tax issues associated with passing your estate on. Your CPA can discuss your estate with you and help you to make the proper plans for your family.