Nobody likes to talk about their own mortality.
But the unfortunate truth is, not having a well-crafted estate plan could cost your loved ones up to 40 percent of your wealth in federal estate taxes upon your death.
This, coupled with the possible lack of liquid assets to pay estate taxes, could cause your heirs unnecessary problems. An estate plan protects your estate from heavy taxation, frees up assets for immediate financial needs and allows your heirs to avoid probate.
It’s not a question of whether you need estate planning. It’s how much planning your estate needs.
Estate planning is more than the distribution of your assets. It covers important issues such as who will take care of your children, who may be called on to handle your medical and financial affairs, and how you can minimize or possibly avoid estate taxes.
Estate planning is a continuing process. You should review your plan at least every three to five years, particularly after a marriage or divorce, the death of a family member, an increase in family income or the birth of a child.
What is the status of your estate plan? Unless you can answer “yes” to all of the questions at right, you have work to do.
- Has someone agreed to raise your children if there is an untimely death or deaths?
- Do you have a source of liquid funds for your family’s security if there is an untimely death or significant disability?
- Do you have a will?
- Have you named an estate executor?
- Have you considered a living trust?
- Have you named someone to handle your affairs if you become incapacitated?
- Have you designated medical and financial powers of attorney?
- If you become terminally ill and are unable to act for yourself, do you know who will make decisions regarding your medical care?
- Do you have a plan to determine what happens to your business upon your death or disability?
- Are you sure your estate assets will wind up in the right hands?
- Are you sure the beneficiary designations in your retirement plan, IRA accounts and life insurance policies provide the lowest transfer tax consistent with wealth preservation and your personal objectives?
- Have you considered lifetime gifts to transfer part of your wealth to reduce or avoid estate taxes?