The Necessity of Estate Planning and Trusts | Finance information

If you do not have a good estate plan, Uncle Sam, your state treasurer or an attorney may be the happiest beneficiaries when you die. Estate, estate planning and trusts are ways of avoiding unnecessary taxation and your family high payments to an attorney that can erode your. Proper estate planning does not have to cost a fortune and it puts you in control of the division of assets. It gives you control from the grave on the disposition of your items besides saving dollars that you want to go to your family.

The most important part of estate planning is the creation of a will. If you die intestate, without a will, your state has a plan on how to dispose of your property. The state?s scheme uses blood relationships to deter mine who gets the assets of the estate. While you might have a specific person in mind for a treasured item you know they?d love and cherish, the state?s plan might give it to another who would never value it as much. Depending on the family that remains when you pass, it could then pass your estate to family members you do not really like and bypass those that really care about you or took care of you. If you have dependent , it?s important to select children guardians for them if something should happen to you and your spouse. Make certain that you ask the party before you name them as the guardian. While they may be the perfect choice, not it?s a big responsibility that they may be ready to handle. You name so to executor or Executrix for the estate in the will. This is the person in charge of distributing the property at your demise. It is best to name alternate in the event that at the primary executor is unable to do the job. You can use a spouse or a trusted for this child. This person looks over the work of the attorney at the time of your death and Arranges for the distribution of your property. If you worry about finding someone else you?ll want later, do not. You can change any part of your will at any time. For those starting on the road to estate planning, you?ll need an estate planning checklist. The first item on the list is an assessment of all your assets. You need to identify the type of ownership of all the assets on the list. For instance, if you own the property in joint tenancy with rights of survivorship, JTWROS, the joint owner Receives the property when you pass. Most married people own their homes and other large items together. In those cases, tenancy by the Entirety is the normal type of ownership. The final type of joint ownership is tenancy in common where each person owns a specific percentage of the property and can sell it. Of course, for own individually owned property, you need to list the owner of the property. list all the life insurance policies on your life or those you. You also need to list the beneficiary of the policies for your estate planning checklist, the cash value, face value and ownership of each policy. Since life insurance becomes part of your estate, in most states and for federal taxation, all of these factors become important for larger estates. List all other assets you own real property as search, automobiles, personal property, antiques , seeking bank products as checking accounts, CDs or savings accounts, brokerage accounts and other liquid assets. If you do not have a joint owner, use a POD designation for bank products, meaning payable upon death or TOD for investment accounts, meaning transfer upon death. This gives no ownership to the recipient until you pass and you can change it at any time. The benefit of using these designations is that the asset does not pass through your estate, meaning it does not go through probate and releases immediately to the POD or TOD. Do not forget to list the name of the institution that holds the asset and the account number. The final items to list on your estate planning checklist are pension plans, annuities, IRAs and other retirement plans. While these items are not included in your will unless you name your estate as your beneficiary, they are part of your estate and increase the value of your estate. You do not use a will for these types of accounts since you name a beneficiary. Unlike a will, there is no delay on asset the recipient receiving the. It does not go through probate and is uncontestable. Many people do not want their assets listed in the paper and want to make transfer easier for their heirs. To accomplish this, they use a trust. Estate planning and trusts not only make it easier and faster for the transfer, but you also maintain more control on the disposition of assets and use a professional manager to protect your heirs from Themselves or increase the value of the estate. So trusts are a way to minimize federal and state estate taxes when properly used. Often people with special needs children use trusts to make certain that there is adequate money available for their benefit. If your adult child is a special needs child, make certain that you work closely with an attorney that Sun does not make them your forethought ineligible for Medicaid or other benefits Necessary for their care. One reason for listing all the items on your estate planning checklist and estate planning and considering the trusts is to avoid unnecessary estate tax or state inheritance tax. estate tax is a portion of the money, after Certain exclusions, subject to taxation. While the federal exclusion is quite high, $ 3.5 million, many of the states have much lower limits. People in special situations, seeking as cohabitation, should speak with an attorney if they want their life partner to receive their estate since exclusions are very low for this type of situation at most state levels, Which causes of increase in taxation.

The federal estate tax includes life insurance policies, even though some of the states exclude life insurance, so the use of estate planning and trusts can be very beneficial to those with large amounts of life insurance. Estate planning and trusts can reduce the amount of tax paid by a Considerable amount, simply by changing ownership of the policy or through the use of an irrevocable life insurance trust.

While not everyone has a large estate, no matter what the size, it?s best to do estate planning and trusts if a trust is necessary. The initial phase of estate planning and filling out an estate planning checklist can take a while. However, once you have an estate plan, you?ll find that it?s easy to update it every four or five years if there are any changes.

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Source: http://www.lovefinanceinfo.com/2012/03/the-necessity-of-estate-planning-and-trusts/?utm_source=rss&utm_medium=rss&utm_campaign=the-necessity-of-estate-planning-and-trusts

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