It’s never too early to start estate planning. From minimizing taxes and preserving wealth, to ensuring your heirs will be taken care of, there are financial and tax planning decisions you can begin making today.
An estate plan is an essential for anyone who has accumulated a good amount of wealth and wants to preserve it. It brings financial peace to you and yourself before the time comes when it may be too late.
You are not alone in procrastinating your estate planning. Only about 50 percent of Americans have a will, and fewer are minimizing the amount of taxes which will be taken out of their estate. However, proactively constructing an estate plan is important, especially if you want estate tax minimization so your family can be left as much as possible.
There are three main things you can start today for your estate plan: protect your assets, create a trust, and prepare a transition or business succession plan.
Protecting Your Assets & Minimizing Estate Tax
Creating your will is a good starting point. Wills detail how you want to distribute your property after your death. If you have children who are still minors, your will can also specify what you want to happen to them. If you do not have a will when you die, the state will decide what to do with your property and children depending on their laws. You need to make sure this is written with estate tax minimization in mind.
However, a will is often not enough to avoid probate, a long and expensive process. While it helps move things along, wills can be contested. If you have assets in different states, then those assets will have to go through probate laws in their respective states. The sooner you start planning, the more you can protect these assets and minimize estate taxes.
While many people think a will alone can do the job, often they aren’t enough as they can lead to family conflict, unexpected taxes, and higher probate costs. Therefore, it’s recommended that an estate plan includes the use of one – or more – trusts in conjunction with, or in addition to, a will to protect your legacy.
Trusts can be arranged in many ways, and are often elected to help you control your wealth, as you can specify the terms of your trust, controlling when and to whom distributions may be made, protecting your estate from your heirs’ creditors or from beneficiaries who may not have experience with money management. Trusts can also be elected for tax planning purposes, as the tax consequences of trusts are typically lower when compared to alternatives. They are also private, which isn’t the case of a will which can be made public.
Transition of Assets & Business
The stability and longevity of your business can depend largely on early – and ongoing – succession planning, a preemptive strategy for assigning key leadership roles within your company to someone so that it continues to operate and grow after you move on to new opportunities, retire or pass away. Succession planning doesn’t have to feel terminal or be an exit strategy. It can simply serve as the roadmap for the transfer of your business to family members to begin retirement, the handing down of your business to select employees, or the positioning of your company for sale. A personalized professional business succession plan, allows you to address a complex combination of personal and professional business challenges and goals that will help you best plan for your future.
Creating a well-crafted estate plan to protect you and your family can seem overwhelming, but getting started early can help. The first step is scheduling a risk-free consultation about what you can start to do today to protect your assets in the long term.