When is the Right Time? Importance of EOF Planning
Creating an estate plan is something we often put off till another day. The problem is, none of us is guaranteed another day will arrive. That’s why you must have an estate plan as soon as possible.
The only thing that is certain is death and taxes.
But with taxes, at least you know the deadline. With death, you don’t know when your time is going to come.
We can live to reach 100, or we pass all too soon. For many of us, death takes us by surprise.At The Giving Crowd, we encourage folks to take a fresh look at their estate planning every 3 to 5 years. Click To Tweet
You should check your estate plan and refresh it every 3 to 5 years because significant life events that change the number of your dependants like getting married or having more children will affect the financial and legal details of your plan.
For example, it’s easy for a young couple to dismiss an estate planning session or a need for a will. They’re young, just getting started in life, and may not have much beyond student debt.
But, once you have that baby, the whole world changes. It becomes imperative because you are taking care of someone else’s life.
Without a will or a trust, the state has the right to decide what happens to your child(ren). (It’s called the law of intestate succession.) Your child could end up with a relative that is unfit.
Worst-case scenario: your child could end up as a ward of the state.
On the other end of the sociological gamut is the business owner or the wealthy executive.
These individuals have a different level of estate planning needs. They are concerned about their family, but their estate also contains their business, investment properties, and other assets.
Living Trust Vs. Estate Plan
People of all backgrounds assume that if they have a living trust, then they are all set.
This is not true — a living trust only avoids probate and maintains the confidentiality of the estate.
The individual’s estate is still exposed to state and federal taxes. Without proper estate planning, these individuals open themselves up to a much wider variety of taxes that can erode the balances of the estate.
A Complete Plan
All too often, estate plans lack succession planning which forces a sale of these assets and closure of the family business. The ensuing chaos is all due to inaccurate, improper planning.An incomplete estate plan can leave your heirs with a smaller inheritance, little impact, and a large tax bill. Click To Tweet
Proper planning, on the other hand, can reduce or even eliminate state and federal taxes connected to the estate. A proper plan of action provides your heirs with:
- A succession plan that arranges for the smooth transfer of business assets such as a business, investment properties or investment portfolio.
- A larger portion of the estate because taxable areas concerning the estate are partially or completely eliminated.
- A distinct reminder of family values that are bestowed to the next generation because the previous generation has donated to charities consistent with the family’s traditions and values.
You Can Count On It
So, whether you have a modest or a massive estate, death and taxes are both certain.
Proper planning is a way to avoid the tax portion. A traditional living trust is not enough — it’s just one element of your estate plan.
There are several nontraditional items that can be used to disinherit the government and make sure your assets go to your family and favorite charity. You have the power to avoid the common pitfalls surrounding death and taxes with proper end of life planning.
To learn more about how to disinherit the government and create a legacy with your estate for generations to come, let’s talk.