All your assets, including your insurance death benefits and retirement accounts, must be transferred upon death. Probate and living trusts, and direct transfers are some of the methods used to distribute these items, if you’ve planned how each of your assets will be transferred. It becomes even more disruptive because of changing tax laws, and problematic if you have not pre-planned, especially when there is a disabled person involved. For this reason, estate planning is crucial.
Death and Taxes: Making It Uncomplicated
Everyone hears the phrase “death and taxes” but few understand exactly how it affects assets. Continuous changes and updated state laws are one reason many are choosing estate planning software. It’s become easier and cost-effective to make annual updates on your own, rather than continuously paying an accountant and attorney.
What Is an Estate Plan?
Estate plans are a set of guidelines that you create to explain how your assets should be distributed. You may have a husband, children and siblings that you want to leave certain items to be transferred at your death. An estate plan helps you identify each asset, determine a market value, and name a specific person to own that item. You can make your wishes known by documenting them to benefit your family and friends, which will guarantee they are carried out after your death.
Do You Have Special Needs?
In many cases there are special needs in a family and finances may be a problem. A minor child may lose one or both parents or elderly parents may require constant care in a moderately-expensive nursing home. Most children promise not to send their parents to a nursing home. Sadly, it may become obvious that mom or dad need round-the-clock care, but many folks are under the mistaken impression that a government program or even private health insurance will cover long-term care. Your parent may need guardianship or a conservatorship. This legal option is much more formal than a simple power of attorney and developing this under an estate plan can create special purposes and boundary arrangements that fit within your expectations.
You should always have a written designation of a guardian for minor children or elderly parents whom can no longer take care of themselves. If you don’t, a state court will make the decision for you. Another way to achieve your goals is by creating a living trust. A trust is a form of contract in which the ownership of property avoids probate. It is created during your lifetime and spells out your specific wishes. It’s become an increasingly popular instrument to avoid probate. Many people today create revocable trusts because it’s less vulnerable to attack by disgruntled heirs and creditors.
Updating and Planning for Change
Over time the value of an estate will probably change, which could affect the beneficiary’s inheritance, as well as any payment of taxes. This is where software comes in handy because you can check the variables, note any decreases or increases and simply update your estate plan. Taking care of your family is only as sound as the plan you’ve created.