Have you considered estate planning? You can only preserve and protect your assets for your loved ones through estate planning. The good news is that it is never too late to implement estate planning strategies.
These practices will include asset protection portfolios and various tax reductions. However, the type of financial and tax instruments you use will depend on your goals and plans. It is, therefore, critical to review your state plans whenever your professional or personal circumstances change.
Have your attorney write up a will
According to the 2021 Estate Planning and Wills Survey, two out of three individuals don’t bother with estate planning documents. It is, therefore, right to assume that more than half of Americans don’t have a will in place. When you don’t write up a will, the probate court will help divide your estate to your beneficiaries. Often, the entire process leaves your family with a substantial bill.
Review beneficiary information
Contrary to what most people think, not all assets can be disbursed through a will. Your life insurance and retirement funds, for example, have to go to specific beneficiaries. It is vital to review your beneficiaries whenever there is a crucial life change. Updating your beneficiaries after a divorce, marriage, or childbirth is a good habit.
Take advantage of annual gifting
You can significantly reduce tax exposure on your estate through annual gifting. Do you know that the federal government offers a $15,000 annual gifting ceiling per recipient? The good news is that this money goes to the recipient tax-free. However, your attorney will help you identify assets that can be gifted before and after death.
Consider using Roth Accounts
A Roth Individual Retirement Account (IRA) allows for tax-free withdrawals provided some specifications are met. Slowly converting your current accounts to these Roth IRAs will help reduce the tax bill for your beneficiaries. However, a Roth IRA is quite different from traditional banking accounts. With this special retirement account, you pay taxes during deposits. All future withdrawals are, therefore, tax-free.
Reduce your estate amount using trust funds
Set up a trust fund if you are worried that your heirs might misuse your money. It is also a standard practice if you have a considerably large estate. Appoint a trustee to oversee the distribution and use of your wealth. Setting up trust funds for minors is an excellent way of reducing your estate amount.
Implementing estate planning strategies
Using the above strategies, you can ensure your assets get distributed accordingly. However, you need expert advice since estate planning is a tricky subject. Trusted attorneys can help you keep up with changes in old estate laws. Ensure you start estate planning now to safeguard your assets and family.