Your estate plan is the most powerful tool you have to control your family’s financial security, and yours. Your choices give your heirs some breathing room after death. While most people think the process of drawing up plans for after-death, the paperwork is rather simple, and pre-planning can save headaches, heartbreak and money in the long term.
Pre-Planning For a Family Change
Remember that old adage, “there is nothing certain in life but death and taxes”, well if you hire an estate planning attorney tampa fl experts say you can also be certain about the value of your estate, and taxes won’t eat that up.
Basic estate planning can help avoid the chaos that occurs when you forget to name beneficiaries. For example, with no beneficiary designated, retirement accounts are paid to the estate, and are subject to tax. Experts suggest that new estate plans incorporate several of the following:
Living Trust. You can use a living trust to avoid probate, manage assets in case of a disability, and save time and anguish for heirs. Only those assets that are transferred into a trust can avoid probate. General Durable Power of Attorney: Sign a durable power of attorney, naming one or more trusted children or family members to manage affairs in your absence, or in case of a disability. Health Care Power of Attorney: Sign a health care power of attorney, naming one or more family members or friends to make health care decisions for you in the event you become unable to make decisions yourself. 529 Educational Plan: Consider a 529 plan to pre-fund kids and grandkids education and save income and estate taxes.
Taxes and Estate Planning
Another reason to consult an attorney experienced in estate planning is because of the IRS. The Internal Revenue Service has the most complex body of rules and regulations that make up our tax laws, and most people are bound to become trapped in those codes. If you and your spouse combined estate are less than the applicable exemption – which is $22.4 million in Florida — then taxes will probably not be an issue for you. Only the very wealthy really must worry about estate and gift taxes. Most people focus on estate planning to avoid probate, and one of the best ways to do this is with a living trust.
Avoiding Probate with a Trust
A trust is a contract, created to separate property into two parts. The legal title and management of the property are vested in one person, and the economic ownership of the property is vested in another. You create the living trust while still alive, and transfer to the trustee, property to hold and manage for the beneficiary. You create the terms of the agreement, for example, when you are deceased, the trustee will pay the beneficiary all income derived from the property, during the beneficiary’s lifetime.
The trustee can perform all the necessary management of the assets, including collection of income, purchase and sales, and payments. This is why living trusts have become so popular and advantageous. You have to wonder, what chaos will ensue if anything were to happen to you? Estate plans help answer that question and keeps families protected.