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Much like other aspects of your finances, estate planning can be daunting work, and will cause plenty of hassles if not done properly. That being said, there are ways and means to make sure that you can be a plan that is as well-informed as possible and has the ability to make a vital difference to the lives of your loved ones you will leave behind.
Each estate plan has specific needs, which should carefully be taken into account before making the plan itself. To make a well-informed estate plan that suits you the best, you must understand certain key topics which might arise in the process:
#1: Working with a tax advisor and/or an attorney
The best way to make a fool-proof estate plan is to work with an attorney as well as a a tax advisor. While the attorney will help create the required estate planning documents (such as power of attorney, will, and health care proxy, among others) and make sure that they are durable, the tax advisor will help you resolve any tax-related issues that may arise in the process.
While it is true that you will be making the decisions, your attorney and your tax advisor can help you understand the various options and know the pros and cons of each. Additionally, they will help you communicate your needs and feelings, avoid making mistakes, reduce your taxes to as less as possible, and adjust your plans according to change in time and/or circumstances.
Remember, while hiring an attorney and a tax advisor will cost you, it is worth it when it helps you make vital savings through informed planning.
#2: Maximizing the amount that you will leave behind
If you do not plan your estate carefully, you may end up leaving a very small amount to your beneficiaries, courtesy taxes as well as the probate process.
It is therefore essential for you to get adequate tax and legal and carefully weigh how every asset will pass to your beneficiaries and to your estate. When it comes to choosing the best option, there is no one-size-fits-all, and it may vary by the asset size, type, your age, among other factors.
Furthermore, you should be well-informed on the actions you need to take to ensure that you lose as less as possible is lost to court fees, taxes, and other expenses.
#3: Gift, Estate and Inheritance taxes
Believe it or not, this is often a big part of maximizing the estate that you will leave behind. Aside the federal taxes that are levied on gifts and estates, certain states levy “inheritance” or “estate” taxes on those who stand to inherit your estate.
That said, both gift as well as estate taxes have exemption limits, and allow you to transfer up to a specific amount without paying any tax. Several make use of this exemption in order to transfer property or money while they are alive, this helps to provide maximums for their assigned receivers.
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