Estate planning is important for everyone, no matter how much wealth they have. Even middle-class families often have investments in real estate and the stock market, which can grow over time. Without a plan, these assets can go through a complicated process known as probate and may end up with the wrong people.
Having a plan in place allows you to name someone to manage your affairs your executor and determine how you would like to distribute your assets. This is called your will, and you can create one with a variety of online services that offer templates and help you fill out forms. It is also a good idea to keep a record of your assets and their value as well as any liabilities, such as mortgages or credit cards. This can be helpful for family members or others who might have to handle your finances after your death.
In addition to a will, you should consider having a living trust, a power of attorney estate planning for inheritance and medical proxy in place. These are legal documents that name a person to make financial and health care decisions for you if you cannot and give directions for your funeral or any sentimentally valuable items. You should also have beneficiary designations on your retirement accounts, life insurance policies and other assets.
An estate plan will also help you avoid probate. Probate is a court-supervised process that can be time-consuming and expensive. In addition, it can be open to the public, so anyone can see your records and challenge a will. An experienced attorney or tax professional can help you understand your options and the ramifications of each.
A good estate plan will minimize taxes, which are usually based on the size of the estate and the number of beneficiaries. In many cases, you will not pay inheritance or estate taxes, but this depends on state law and your specific situation.
Another benefit of having an estate plan in place is that it can prevent family strife and lawsuits. A good attorney can help you put together a plan that helps to minimize arguments and prevents disputes over what is fair.
Inheritances aren’t always easy to come by, and they can quickly turn sour if there isn’t proper planning in place. With the help of an experienced attorney and a financial advisor, you can set up an inheritance plan that can be tailored to your unique circumstances and goals. By doing so, you can ensure that your heirs receive the inheritance you worked so hard to provide them with. For more information, contact an Ameriprise financial advisor.1