Do you already have a will prepared? You might be thinking that an estate plan or a will is only for the rich. However, if you have a family, you should consider having an estate plan sorted out early on. If you already have one, you should keep it updated. An estate plan is needed to protect your beneficiaries, especially young children. This will also help your heirs ease the burden of inheritance taxes later on. Most importantly, an estate plan can help you avoid family feuds once you are no longer around. Don’t know where to start?
Follow our guide in creating an estate plan below.
Knowing Your Net Worth
The first step in estate planning is calculating your net worth. Your net worth stands as a solid foundation of a good estate plan as it helps you divide your assets with regard to any taxes and other liabilities you are responsible for. To calculate your net worth, you have to get an estimate of your assets which includes your life insurance, bank accounts, cars, real estate, retirement plans, and much more. Once you have the sum of all of your assets, subtract the total estimated cost of your debts, loans, mortgages, and other forms of liabilities. The difference between the two values represent your net worth.
Check for Estate Taxes
After you have calculated your net worth, you should check if you owe any federal taxes. The majority of estate plans do not owe federal taxes, however, you need to check if you owe any state estate taxes or inheritance taxes. Without proper planning, this can cause trouble to your beneficiaries as the taxes may cost them a lot. To reduce estate taxes, you may set up trust accounts for your beneficiaries.
Hiring an Estate Planning Attorney
To make sound decisions, it is best to seek legal advice as this will help you assess your options of either writing a will or a revocable living trust. In Georgia for instance, the legal professionals from https://www.atlantaestatelawcenter.com/estate-planning/ have found that most residents do not have an estate plan. This is an alarming fact as this means that many beneficiaries are not protected. You and your loved ones’ needs are different; hence, it is best to discuss your options with an attorney to get the best-suited set up for you and your family. But just like any other form of service, it is best to set a standard in hiring an estate planning attorney. Your attorney’s fees must be reasonable and must have a reputable track record. You may check for referrals from your financial advisors, accountant, or your state association.
Preparing A Disability Plan
You must also create a plan for what happens if you become incapacitated. Keep in mind that without a disability plan, the court will take control of you and your assets. Your disability plan should include a medical plan which covers how you want to be cared for and a financial plan which will dictate who will manage your finances and property.
Once you have created a disability plan, you must create a plan that covers what will happen to you and your family members when you die. This covers funeral expenses (burial or cremation), organ donation (if applicable), and other end of life wishes. Apart from that, you should also include who will inherit what and when he or she can receive it. If you are accountable for any inheritance, state, and federal taxes, you should state how these taxes will be paid. Lastly, you have to select an executor who will carry out your wishes. You may appoint multiple people or institutions to execute your plan.
Reviewing and Updating Your Estate Plan
Once you have prepared your estate plan, it is important to keep it updated regularly. What is perfect today may not be the best one after a few years. Federal taxes, your living conditions, and marital status can all change. As there are several adjustments that may happen along the way, it is best to set a review and update of your estate plan with your lawyer yearly.
When it comes to managing your wealth and assets, you have to plan ahead. An estate plan is needed if you want to protect your loved ones and avoid any family messes in the future. If you want peace of mind, it is best to prepare your estate plan, disability plan, and death plan early on. This will not only protect your legacy but keep your family members’ best interest.