Estate Planning Overview
An Overview:
What constitutes your "estate"? Essentially, it includes everything you own at the time of your death minus your debts. Occasionally, rules can apply which may bring back into your estate assets you’ve given away, or thought you’d given away.
Taxation considerations for your estate will vary depending on factors such as where you live and the total value of your estate. That’s why it’s so important for you to speak with your accountant to determine the most appropriate way for you to establish an estate plan that works for you.
In addition to the two primary estate-planning tools - wills and trusts, there are other important tools and documents you should consider:
- Last Will and Testaments
- Life insurance
- Trusts
- Family Limited Partnerships
- Ownership of Assets
Trusts
A common misconception is that trusts are only suited for use by the very wealthy. That is just not the case today. People of a wide variety of income levels use them as estate planning tools. Trusts are complex and costly to set up and run, requiring a higher level of services than wills. They are useful in accomplishing various estate planning and financial planning goals. Trusts can be used for many worthwhile purposes, some of which are listed below:
- Give property to children.
- Reduce estate taxes.
- Leave assets to a spouse.
- Provide for life insurance used to pay estate tax.
Your accountant, together with your attorney will be able to advise you if a Trust is a viable proposition for you.
Post-Mortem Letter
If you pass away, will anyone but you know where your tax records and supporting tax documents are located? How about your important documents such as deeds, titles, wills, insurance papers. Do these people know who your accountant/ your lawyer/ your broker is? By failing to leave your heirs this information, it will cause a lot of headaches and may also result in additional taxes and costs being incurred without the appropriate documentation.
Life Insurance
The main purpose of life insurance is to provide for the welfare of survivors. But life insurance can also serve as an estate-planning tool. For example, it can be used to finance the payment of estate taxes or to finance a buy-out of a deceased’s interest in a business. It can also be used to pay funeral and final expenses and debts.
