Economic uncertainties in today’s world make it more important than ever to have an estate plan in place. CNN’s “Money 101″ series covered estate planning and offered up some information and tips for those considering implementing the various tools of estate planning. Here are some:
- Having even a basic estate plan in place is important, no matter what your net worth may be. Contrary to popular belief, you don’t need to be wealthy to consider having a trust and/or will.
- The elements of the estate plan can include a will, power of attorney, living will, healthcare directive, and a trust
- Start the process by taking an inventory of assets including investments, retirement savings, insurance policies, and real estate or business interests. Consider who you would want inheriting your assets, who should handle financial affairs if you’re incapacitated and, lastly, who you would want making medical decisions if you are not able to make them yourself.
- Everybody should have a will. If you don’t, the state will decide who gets your assets. A will is also needed to take care of any holdings that may exist outside the trust.
- Make sure to discuss estate planning with family members, in order to avoid confrontation or conflict surrounding the distribution of assets.
- There are a few federal tax issues to consider, including the federal estate tax. The exemption amount fluctuates yearly and an estate plan can help mitigate these expenses.
- Two ways exist to give gifts tax-free and reduce your estate’s value. First, you may give up to $14,000 per year to an individual without being taxed. Second, payments to medical or education bills are tax-free regardless of the amount, so long as the payments are made directly to the institution where the expenses were incurred.