Estate planning is the process of evaluating one's assets, properties, and different investments and deciding how they will be managed in the case of your passing or inability to handle them yourself. Estate planning is all about maximizing your security and your impact through a variety of financial arrangements and the creation of a will.
The core document of an estate plan will be your will, a legal document that determines who will be the executor, or person who manages and is in charge of your estate. It also contains information on what assets you possess, who will receive those assets, and, if necessary, who will gain guardianship of any minor children upon your passing. Working with an estate planner to create a will helps you ease the frustration and complexity of taxes and estate understanding for your heirs, making a clear plan from which everyone can work.
Beyond the will, you will likely consider creating a variety of other documents. Creating trusts, for instance, allows a third party to hold your property or assets for the beneficiaries in the case of your passing, which can make a transfer of assets more straightforward later on. You may also want to establish documents that show who you are trusting to make decisions for you in the case that you aren't able to make decisions yourself. Choosing a proxy, like a spouse or adult child, can be helpful for legal and medical decisions. Designating a health care proxy to include with your will gives someone permission to make healthcare decisions for you based on their knowledge of your wishes, while a durable power of attorney gives them the authority to make legal decisions and sign for you on legal forms.
One of the primary goals in estate planning is to maximize your assets' impact for the charitable organizations or persons to whom you bequeath them. When an estate is large enough, it becomes subject to estate taxes, which can be extremely high. Working with an estate planner can help you to strategize: giving gifts that are below the threshold for Gift Tax, as well as donating to qualified non-profit organizations, can reduce your tax burden in life and ensure that your estate isn't subject to unnecessary taxation. The same strategy can be imposed to avoid court fees by creating the appropriate documents to empower your estate's executor.
Another important strategy in your estate plan is to create clarity and equity for your heirs. When executing your estate, your heirs will also be mourning, and by creating a clear and straightforward delineation in the will of who will receive which benefits, you remove the opportunity for strife or confusion. You can also include documents like an advanced directive, which offers guidance on end-of-life care in the case of a life-threatening condition. Knowing your wishes can help your descendants or spouse feel that they have abided by what you would have wanted if they don't get the chance to ask you.
Creating an estate plan may feel premature, but the reason it is valuable to develop one early is that you can always revise and maintain it. You can visit your estate planner and change the structure of any of your documents. For instance, the birth or adoption of new children or grandchildren can often cause people to revise their beneficiaries and the division of assets. When you purchase a new asset or have an immediate family member diagnosed with an illness that could require long-term medical care, spending some time revising your estate plan can give you security and confidence that you've prepared appropriately for the future. While many people wait until a life-changing event happens to revise their estate plan, it is ideal to check in with your estate planner every three to five years to make sure your plan still serves your future goals.
Ultimately, an estate plan provides you with the assurance that will preserve your heirs from unnecessary taxation while reducing paperwork and legal headaches for the person executing your estate. While many people retain their assets because they could need them for circumstances like long-term medical care, creating a will and appropriate trusts can allow you to make very generous donations to charitable organizations of your choice upon your death, or to pay for essential and valuable assets like a college education for grandchildren. An estate plan gives you peace of mind while still leaving you with access to the cash flow you need to have a fulfilling retirement.
Our estate planning services offer you an estate planner with whom you can discuss your various assets and liabilities. By explaining to a financial advisor who understands the legal and tax ramifications of different estate options, you will see where your assets are performing well and where there might be room for simplification or diversification in your assets. The estate planners at Altus Wealth Group can help you evaluate how to transfer assets to your heirs, whether it is life insurance, retirement accounts, investment accounts, or real estate.