Protect What’s Yours: 8 Useful Vehicles to Help You Preserve Your Wealth for Your Loved Ones

When starting with your estate planning, you will definitely want to get help from a qualified elder attorney. Prior to this, however, it can be helpful to learn about the different estate planning tools and vehicles that may be right for you. Read on to get a nice overview of eight of the most useful, and effective, estate planning vehicles available today. While they may not all be right for you, it is always helpful to know your options.

Last Will & Testament

For most people, a Last is the right place to start with estate planning. In fact, a Will is something people should have in place pretty much from the moment they become adults, or at least once they get married or have children. Over the years, Wills can be updated and changed to reflect your position in life. For people with modest estates, a Will may actually be one of the only estate planning documents that they need. Once an estate gets sufficiently large, however, it will almost always be smart to add additional options to your portfolio. Knowing when a Will is enough, and when you will need something more, is an important conversation to have with your estate planning advisor or attorney.

Living Trust

Once someone ‘outgrows’ a Will, they will typically start using a Living Trust. A trust is a legal that you put your assets into. The trust then holds the title, and retains control, of all of the assets within it. During your life, you will then retain control of the Living Trust, which means you can still control the assets. To put it simply, the Living Trust is a ‘middleman’ for your assets. The biggest advantage to having a Living Trust is that they typically don’t need to go through the process when you die. Instead, the trust will immediately transfer to the person or people that you have identified. This can save your loved one months of hassle, and thousands of dollars. It can also help to keep your estate private, which is important to many people.

Durable Power of Attorney

Giving someone Durable Power of Attorney will allow that person to make decisions concerning your estate when certain conditions are met. Some people grant a trusted loved one with Durable Power of Attorney immediately, with the understanding that they will only use the authority when necessary. Others setup their Durable Power of Attorney to only become active should they become disabled, go missing, or have certain other conditions be met. You should have a General Durable Power of Attorney to take care of your finance and real-estate matters and a Health Care Power of Attorney for your medical concerns.

Charitable Trusts

Many people like to give some (or even all) of their money to their favorite upon their death. Due to estate and other taxes, however, the amount of money that actually makes it into the hands of the charity can be reduced quite significantly. Setting up a charitable trust while still living can help to reduce that burden. In addition, it is possible to set up the charitable trust so that the money is given over time, or implement other requirements for how the money is to be given.

Life & Long Term Care Insurance

Having insurance in place is important throughout your life. As long as you are earning money to support your spouse and/or children, a good life insurance policy that can replace that income should you pass away is essential. In addition, Long Term Care Insurance offers great protection against the potentially massive costs of long term care, should it become necessary. When done early, both of these types of insurances are very affordable and offer a lot of protection.

Irrevocable

If you have a life insurance policy, it is nice to know that your loved ones won’t be taxed on the money they receive from this policy payout. What many people don’t realize, however, is that the value of the policy itself is actually included as part of the estate at the time of death. This means that if a family is relying on life insurance money to pay off estate taxes (which is quite common) the total amount owed can be quite a bit higher than expected. Moving the life insurance policy into an Irrevocable Trust, however, will eliminate this particular tax burden and can save a lot of money in the long run. This is typically only worth the effort with fairly high dollar life insurance policies.

Gifts to Heirs

For most people, part of estate planning is making sure that your assets are available to leave to your loved ones. A growing number of people, however, are beginning to give a portion of their estate to their loved ones well before their death. For those with significant assets, this can be a great way to be able to watch your heirs enjoy their inheritance before you pass away. It can also give you some level of additional control over how the money is used. Giving money or other assets to your loved ones now can also dramatically reduce the amount that will have to be paid upon your death. A person can make a of up to $14,000 per year without having to pay the ‘gift tax.’ So, if you give a child $14,000 and your spouse does the same, you can give up to $28,000 per year to as many people as you would like. This can help to significantly reduce the taxable size of your estate, while also ensuring your loved ones are getting the assets you want them to have.

Business Succession Plan

If you own a business, you need to think about what will happen to it when you decide to retire, or should you pass away. Your employees and clients rely on you for your business, and taking steps to ensure a seamless transition is the responsible thing to do. Identifying who will take control of the business, what will happen to your ownership, and making other important decisions now will help avoid potentially serious complications down the road.

Start Planning Today

One of the biggest mistakes people make when it comes to estate planning is waiting too long. It is really never too early to begin the estate planning process. The sooner you begin, the more options you will have available to you. In addition, as you get older, you can always make changes that are more appropriate to your state in life. Contact an attorney from Estate & Long Term Care Law Group today to begin planning strategies to protect your wealth for generations to come—you won’t regret it.