It does not matter how much wealth you have saved up, either in tangible assets or investments: You must have an estate plan. The goal of this plan it to ensure that everything that you have is distributed properly when you pass away, according to your wishes. It can also help to move the majority of your wealth to your heirs, rather than allowing the government to claim it. Below are five important things to consider as you make your estate plan.
Medical Power of Attorney
As experts at CNN have pointed out, a big part of your overall plan is the medical power of attorney. In essence, you must give someone else the power to make your medical decisions for you in case you are not of sound mind to do so yourself. An estate plan is about more than the money.
A trust can be set up if you want money to be used for something specific. For example, you may want to leave money to your granddaughter, but you want her to use it for college, not for a new car. The trust can specify that the money is only to be released as needed for tuition, at least until she is done with college. You can also establish trusts that give to charities, provide scholarships, fund universities, and much more.
When determining who gets what, be as specific as you can be. This can eliminate future court battles over vague wordings. For instance, rather than saying that your wife gets the home and the furnishings–possessions your children may think of as their own–specify exactly what pieces of art or furniture are to go to your wife and which ones go to your children.
To reduce the government’s take, find out how much you can pass on without taxes becoming involved. For instance, you can give away as much as $14,000 per year before it is taxed, and this number increases to $28,000 if you and your spouse are in it together. Sometimes, distributing your estate over a few years lowers the taxable amount.
Talking to Your Family
Finally, it is worth noting that the best route, as you craft your estate plan, is to talk to your family about it. Ask your children if there are any specific pieces of property that they want. Ask your spouse if he or she has a preference regarding what is done with the money after your passing. This is not something that you absolutely have to do on your own. If you involve everyone else who will become part of the estate plan, you can work around conflicts and make sure that everyone is happy with the result.
It’s not hard to make an estate plan, but it’s still something that people often put off for too long. You are far better off to make one today, even if you are nowhere near the end of your life, so that you will be prepared.