3 Tips For Setting Your Family Up With Your Estate Planning

Although no one likes to think about it, planning how your money and possessions will be divided up among your loved ones once you pass away is a vital part of the aging process. And while most people think they don’t need to worry about this until they are around retirement age, you never know what could happen to you.

For this reason, it’s a good idea to have some kind of will or trust set up as soon as you have a decent amount of possessions or funds.

While you may think that estate planning is as easy as deciding who gets what, there is a lot more to organize and set straight than you may have realized. To help you manage this monument us task, here are three tips that will make this time easier on your family when going through your estate.

At Least Tackle the “Big Four” of Estate Planning

SIenna Kossman, a contributor to U.S. News and World Report, states that the four parts of an estate plan that every adult should have, regardless of age, are a durable power of attorney, life insurance, a will and a living will.

By at least taking care of these four parts of estate planning, you will ensure that any of your loose ends will be tied up, your family will have enough money to survive for a while, and your beneficiaries will know who, how, and where your estate is to be used whether you die or become disabled to the point where you can no longer function on your own.

Without these four documents, your family will have a much harder timing managing your estate.

Get Your Records in Order

You wouldn’t believe how much documentation and legality there is tied to just one person. And while you may know exactly where you keep all your important papers and information, your family or beneficiaries may not.

By planning your estate well before it’s needed to be used, EstatePlanning.com shares that you can take care of any discrepencies, errors or misinformation before red flags are raised when you’re no longer around to address them. You will have gathered all relevant information for your family and sorted through what was important to you and what wasn’t in order for them to fulfill your wishes exactly how you intended.

Use Life Insurance Policies to Cover Taxes

When planning your estate, keep in mind that just because you gave someone X amount of money doesn’t mean they will actually get that amount. When money or property is inherited through an estate, a certain amount of that will be taxed. To help your beneficiary to not have to worry about this dilemma, Investopedia recommended to Forbes that you offset predicted taxes with life insurance payouts.

While inherited money is taxed, money paid out from life insurance is not. Therefore, if you expect your beneficiaries to have to pay $250,000 in taxes after going through your estate, you can leave a $250,000 life insurance policy to be paid out and funneled directly to that tax bill, saving your family from losing more than you would like.

Estate planning is the process of anticipating and arranging for the disposal of an estate during a person’s life. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.Estate planning, while something you may want to avoid, will really benefit your loved ones once you are no longer there for them.

So if you’re just getting started or are unsure how this process will be beneficial, start with the tips mentioned above to get you going on the right track for your estate planning.

Tags: Estate planning

Category: Family Finances