The Importance of Having an Estate Plan
At Oak City Estate Planning, we know how important it is to set aside time to create a comprehensive estate plan. Your estate plan will ultimately determine how your assets are managed and distributed among your heirs and beneficiaries after you pass away or if you become incapacitated. If your goal is to make sure all of your final wishes are respected and carried out, then you need to have a comprehensive estate plan in place that covers all of your wealth, belongings, and property.
What Should I Include In My Estate Plan?
Estate planning requires taking inventory of all your assets, property, cars, collectibles, stocks, life insurance policies, and investments. A proper estate plan includes a will, trusts, advanced medical directives, and financial powers of attorney.
These crucial estate planning documents can be used to:
- Reduce estate taxes
- Name which beneficiaries you want to inherit your assets
- Set up specific funeral arrangements
- Appoint a person you trust to manage your important affairs if you become incapacitated
- Assign a guardian for your minor children
- Detail the specific type of end-of-life health care you want, or don’t want, to receive
- Name or update beneficiaries on your life insurance policies and retirement accounts
- Name an executor to ensure the terms of your will are fulfilled
Drafting Your Will
Your will is a legally binding document that explains who will inherit your assets after you pass away. Your will can be used to appoint guardianship for any minor children you have, as well as an executor who will be in charge of executing the terms of the will and guiding it through probate, where it will be authenticated and validated.
Certain assets like life insurance policies and retirement accounts can be transferred to a beneficiary outside of probate. If you pass away without a valid will, then the state gets to decide who inherits all of your assets and property. Generally, the state will split your assets evenly among your next of kin.
Making a Plan for Estate Taxes
If you have a large estate, then you need a plan to minimize taxes. Federal estate taxes are triggered if the total value of assets exceeds $11.58 million. The portion of the estate that exceeds the limit is taxed. Spouses can generally claim an unlimited marital deduction that exempts them from the estate tax, though they can still be taxed at the state level.
Six states in the U.S. have inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. These taxes must be paid by the heir of the estate.
Consider the following if you want to avoid taxes after death:
- Spending your assets before you pass away will reduce the overall size of your estate
- You can shield your assets by setting up an irrevocable or bypass trust
- You can gift part of your estate to loved ones while you are alive
- Move to a state without estate or inheritance tax when you retire
- You can gift property or assets to qualifying nonprofit charities
Common Estate Planning Mistakes
Even minor estate planning mistakes can result in legal battles among family members after you die, which is why you need to avoid making the following estate planning mistakes:
- Failing to update beneficiary designations on your retirement accounts, annuities, and life insurance policies
- Failing to update the language in your will or powers of attorney after major life events
- Failing to properly finalize the will
- Failing to properly fund a revocable trust
Speak to a Seasoned Estate Planning Attorney Today
Our legal team at Oak City Estate Planning takes great pride in the wide range of estate planning services that we offer to clients. We understand how important it is to protect your legacy and the future of your loved ones, so please reach out today so we can put our skills and resources to work for you.
To request a free vision meeting with our legal professionals, call (919) 975-5359 today or contact us online. Our experienced estate planning attorneys are ready to help you and your family prepare for the future.