Estate Planning: When & How to Start

Estate Planning: When & How to Start

When should you begin estate planning, and how do you get started? The “when” question is easy to answer: start now.

As no one knows when they’ll no longer be with us, it’s important to begin the estate planning process early and make revisions as life changes occur. Really, if you think about it, your estate plan can become more of a life-planning tool as opposed to a mechanism for distributing assets upon death.

Effective estate planning will help you avoid probate, minimize taxes, nominate guardians, nominate individuals to act on your behalf if you are incapacitated, identify successor trustees and provide an asset distribution plan. How do you get started?

According to CNN Money, “Your first step: Take stock of all your assets. These include your investments, retirement accounts, insurance policies, real estate, business interests and valuable items – in financial or emotional terms – such as jewelry, cars, baseball card collections or your great-grandmother’s good china.” Think about how you want to use those assets now, and who you want to pass them along to. Also consider who you would trust to handle your finances and medical care if at some point you become incapacitated. It’s always good to discuss your plans with your heirs, too. This can help you head off any disagreements that may arise when you’re gone.

Once you’ve started thinking about all of this, go to a lawyer that can help you get it in clear, legal records. General estate planning usually consists of the following documents:

  • Living Trust
  • Pourover Will(s), including guardianship provisions
  • Durable Power(s) of Attorney for Financial Matters
  • Advance Health Care Directive(s)
  • Deed(s) transferring real property to the Living Trust
  • Certification of Trust

If the value of your estate exceeds the estate tax exemption amount, you might want to consider advanced estate planning instead, which includes the following:

  • Family Limited Partnership (FLP) / Family Limited Liability Company (FLLC)
  • Irrevocable Life Insurance Trust (ILIT)
  • Qualified Personal Residence Trust (QPRT)
  • Private Annuity
  • Private Foundation
  • Charitable Remainder Trust (CRT);
  • Charitable Lead Trust (CLT)
  • Grantor Retained Annuity Trust (GRAT)
  • Grantor Retained Unitrust (GRUT)
  • Grantor Retained Interest Trust (GRIT)
  • Legacy Trust
  • Dynasty Trust

Of course, an attorney can help you figure out which documents and forms are necessary for your situation as well. Do you want help getting your estate planning documents in place? Contact us to arrange a time to discuss your needs!

Photo Credit: shino 誌野

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