Like your parents and
grandparents before them, you've worked hard to provide your family with a
comfortable, secure lifestyle. Part of that may have started with wealth passed
from them to you. Now is the time to think about how you, too, can make sure
your financial success is managed and shared with your family the way you want.
To do this may require estate planning, or a will.
There's nothing easy about estate planning. It involves the total sum of your
wealth and how it should be handled after you're gone. Once these issues are
raised, understood, and addressed, most people experience a strong sense of
relief knowing they've done the right thing for themselves and their families.
Your estate includes everything you own. It also includes assets, such as cars
and jewelry, real estate, bank accounts, life insurance policies, stocks,
bonds, and other property. Put simply, estate planning determines who will
receive which portions of your estate after you die. Without estate
preparation, that decision is left largely up to the state, which usually
assesses higher taxes. That fact, along with not knowing what your wishes were,
can take a real toll on your family.
A will is a basic part of an estate plan. Wills are something everyone should
have in place, if for no other reason than to avoid confusion and frustration
after you're gone. Trusts can also be an important part of any smart estate
strategy, but people with modest wealth (estates totaling less than $100,000)
may not have as great a need for them.
Many believe that the purpose of sitting down and establishing wills, trusts,
and other strategies is to reduce taxes after your death. While lessening the
tax burden on your survivors is a nice result of good planning, it may not be
the only purpose. Estate planning aids your retirement planning and helps you
allocate your assets, allowing enough money to live on while also passing along
a portion of your estate to your children and other family members.
Don't let tax considerations become too consuming. Some people do such thorough
tax planning that they fail to leave themselves enough to live on. Efficient
estate plans can do wonders for reducing taxes for years to come, but they can
also diminish the quality of your life today.
Finally, because wills and trusts are legal documents, you'll also need the
assistance of an attorney.
Learn more about how to Consult a Financial Professional.
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