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Improving your estate plan

On Behalf of | Jun 3, 2021 | Estate Planning |

An estate is your legacy, but many plans share common mistakes. Taking these steps can help assure that your estate planning meets your family’s needs and that your wishes are carried out.

Basics

A complete plan should be prepared and contain a will, power of attorney, advance medical directive and living trust. Your plan must be periodically reviewed and updated.

Prepare your family

Family members, particularly younger or financially unsophisticated or irresponsible members, can waste or mismanage sudden wealth. Prepare them by telling them about how much they are likely to inherit and how the money was accumulated. Sharing your views about managing money and assets is often helpful.

Trusts may be appropriate for younger or irresponsible heirs. Trusts can manage wealth, control distributions and limit access.

Estate plans can also cause or worsen family conflict or resentments. Avoid having siblings with different views or personalities jointly inherit property or a business.

Gifts

Giving gifts now can help prepare your heirs for handling wealth. Cash gifts are usually spent quickly. Property gifts are more likely to be kept and held for future use.

Taxes should play a role in deciding the gifts you give. Tax-prudent giving can increase after-tax wealth.

Executor

Your executor needs to know your assets and liabilities, the location of important documents, passcodes, and other important details of your estate. Simplify and streamline the details of your estate and write important information down for your executor.

Business succession plan

A business may not survive the second generation of owners without a business succession plan. Business value also drops quickly if its owner dies without having a firm succession plan established.

These plans designate an individual or group of people who will run and operate the business and set forth when the transition will take place. If no family member wants to be involved in the business, this plan can dictate whether the business will be sold upon your death or retirement.

Improving accounting and other information systems so that it is ready for sale and inheritance. Successful plans typically take at least five years.

Trusts

A revocable living trust will help avoid probate and create a process for managing assets upon disability or death. Trusts must have legal title to assets.

Real estate is transferred to the trust when their deeds are changed. Vehicles and financial accounts must have their title changed.

Attorneys can help you understand your estate and provide options. They can prepare the appropriate documents for your plan.

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Jennifer