Estate planning is crucial in ensuring your final wishes are followed. Not having a financial estate plan in place might create significant challenges for your loved ones as well as uncertainty regarding how you want your estate distributed.
However, the estate planning procedure can get very complicated especially if you have a lot of assets. To simplify the estate planning process, here are some tips on how you can ensure you, and not the government, decide where your assets go.
To learn more about estate planning in El Paso, TX, contact Clifford, Ross, Raudenbush, and Cooper LLC at (915) 593-3330 today.
Outline Your Wishes
Your estate plan should specify how you want your possessions to be handled and who should care for your children in the event of your passing. If you don’t have an estate plan, a magistrate in probate court will likely decide for you. An established estate plan will also lessen the likelihood that your assets will be subject to probate. Here are some common terms used in estate planning.
Financial Power of Attorney: A lasting financial power of attorney (POA) empowers an individual or organization to handle your finances if you cannot do so yourself.
Healthcare Directive: A written contract known as an advanced healthcare directive provides instructions on medical procedures and healthcare services.
A Living Will: A written statement detailing your desires in regard to medical treatment in circumstances in which you can no longer express informed consent.
Testament and Last Will: A final testament is a formal document that outlines your wishes regarding your property and dependents after your passing. You can specify your heirs, choose guardians for young children, and choose an executor to handle your estate.
Make a Team
Take the time to put together a knowledgeable team of experts to assist you in drafting your estate plan. To create a comprehensive estate plan that is unique to you, we recommend working with a financial advisor, tax expert, and estate planning lawyer.
Create Guardianship for Your Dependents
The next item on the estate planning checklist is to decide who will take care of your children or dependents after your passing. They include young kids, a family member with special needs, or even aging parents you care for.
Consider State and Federal Estate Taxes
Estate taxes are government levies on assets, including money, shares, real estate, and other priceless possessions. Consult a tax expert who can assist you regarding the appropriate estate tax preparation options for your situation while working with your lawyer and financial advisor.
A trust is a formal structure created to hold assets for your heirs. If you establish a trust, you get to choose what goes into a trust, who receives what, and how it’s dispersed. The following are a few of the most common types of trusts:
Irrevocable Trusts: Once you establish an irrevocable trust, it cannot be altered or revoked. An irrevocable trust provides an additional layer of defense against litigation, creditors, and the IRS but lacks the freedom of a revocable trust.
Revocable Trust: You can alter or terminate a revocable living trust at any time before your passing. Your revocable trust will become irrevocable after your death.
Charitable Trusts: Because the assets you place in a charitable trust are no longer regarded as your personal property, they can be passed to your beneficiaries without being subject to taxes or legal action.
The judicial process of having your will validated by the courts is known as probate. Because probate cases are open to the public, they may be drawn out, expensive, and very public. Luckily, you can avoid going through the probate process. Writing and upholding a will, appointing an estate executor, and appointing a trustee to oversee trust assets are all strategies that might lessen the likelihood of probate.
Check Income for a Decedent (IRD) Taxes
You should be aware of additional taxes from the federal estate tax. Revenue in Respect of a Decedent, or IRD, is a little-known tax that affects people who inherit specific money. If you pass away, your property or your beneficiaries will be required to pay income taxes on any untaxed income. IRD-taxable earnings examples include:
- Revenue from savings bonds
- Payouts from individual retirement accounts
- Sales incentives
- Additional sources of income you would have had if you had lived
Contact Our Accounting Firm in El Paso, TX
Drawing up the ideal estate plan can be a little overwhelming. If you would like additional information on estate planning in El Paso or would like expert assistance in establishing or updating your estate plan, contact the experienced financial estate planning team at Cooper, Ross, Raudenbush, and Cooper, LLC online or call (915) 593-3330.