Protecting your family and your legacy is about more than deciding what you want to do with your assets. Estate planning includes a number of documents and strategies that, taken as a whole, help you accomplish your goals and protect your present and future. The right estate plan will be as unique as you are. In order to create the right estate plan, you must employ the right tools.
Having A Will Is A Good Place To Start
Many people believe that estate planning means drawing up a will. While many estate plans are more complex, it is true that creating a last will and testament is an excellent starting point. Without a will, your estate will go through the probate process. Probate may not deserve its poor reputation, but it is unlikely that the statutory guidelines used to distribute an estate in New York will properly reflect your wishes. A will gives you the chance to control how your property and financial assets are distributed after you pass.
Tools To Protect Your Assets
Another common misconception surrounding estate planning is that it is only for the very wealthy. When people hear about trusts and estate tax planning, they assume that the discussion concerns rich people trying to protect their millions. This is simply not true. Trusts are one of several tools that can be used to protect your assets now and in the future. Trusts are useful for limiting tax liability, but they can also protect your assets from misuse and give you the power dictate how your money is spent by the next generation.
Understanding Who Gets What
It can be difficult to keep track of all the various accounts, assets and policies accumulated over the years. Many people have multiple retirement accounts, IRAs, insurance policies and investments. An estate plan will help you identify your assets, name the proper beneficiaries and see to it that your money goes where you want. In addition, the estate planning process can help you consolidate or transfer your assets into more effective areas.
Death And Taxes
Most estate plans still leave some measure of tax liability. Still, the tax difference between a carefully crafted estate plan and probate distribution can be startling. It is vital to understand current tax laws and their impact on your estate. New York and federal tax laws can seriously damage your ability to protect your family unless you account for them in advance.
Source: U.S. News & World Report, “5 Estate Planning Strategies to Keep Your Money in the Family,” by Contributor, 19 November 2015