11 Oct 2013

Steps To Properly Plan Your Estate

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Cute-older-coupleNo matter how large or small your estate, your assets and your family should be protect when you die. There are some easy steps you can take to ensure your estate plan is in place, your assets will be protected and passed on appropriately, and for your peace of mind.

1. Create a basic estate plan — an estate plan should include a will, assignment of powers of attorney, a living will (medical power of attorney), and for some people, a trust might also make sense.

2. Take inventory of your assets — create a list of your investments, retirement savings, real estate, business interests, insurance policies and property assets. Figure out which family members and friend you want to inherit each asset.

3. Create a will — a will tells your family and friends where you want your assets distributed when you die. This is an important document if you have young children because you will name guardians for your children here.

4. Determine if you need a trust — you may require more than just a will to protect your assets. Trusts allow you to put conditions upon how and when your assets will be distributed. For example, a child might receive maintenance fees until the age of 30 when he or she will inherit the management of the trust.

5. Discuss the plan — be sure your heirs understand the estate plan. This may help prevent disputes or confusion later on.

6. Be aware of federal estate tax exemptions — In 2013, estates under $5.25 million are exempt from the tax. Amounts above that are taxed up to a top rate of 40%.

7. Tactics — will you may leave all your assets to your spouse tax-free, this may not be your best option. It could mean your children will likely play more when you spouse dies and in many cases just defers the decisions about inheritance and distribution of assets.

8. Tax-free gifts — take advantage of tax free gifts. You may give up to $14,000 a year to an individual (or $28,000 if you’re married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.

9. Charitable giving — a donation or charitable gift fund or community foundation can be create to that will invest your funds and allow distributions to various charities each year.

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