The Reasons Proper Estate Planning Is Of Great Benefit
Posted at by ifydcat on category FinanceEstate planning is the process of ensuring that the will states the wishes of the individual, making sure all of the assets are distributed appropriately, effectively reducing the estate tax as much as possible and making sure a viable power of attorney has been put into place. One of the first functions of the process is to make sure that an executor is established to oversee the will and wishes of the decedent. A person should also take an inventory of all of the assets that they possess and make a list of possible people to inherit them.
Assets of a person include residences, retirement and investment accounts, bank accounts, automobiles, insurance policies and business interests. For most of the accounts and insurance policies, at least one beneficiary should be assigned through the institution that holds it. All of the assets should be designated to a recipient through a person’s will.
Proper planning requires drafting a will and ensuring its legality. It should be stored in a safe place and a copy should be given to an attorney or the executor. This is the document that entails the wishes of an individual. Periodically, the person should review and update it as necessary.
Each year the Internal Revenue Service changes the limits of the estate tax. Congress repealed the tax in 2010, however it was reinstate in 2011 at $5 million. If the total value of all of the assets exceeds this amount, then a 35 percent tax is applied. By gifting parts of the estate prior to death, a person may be able to avoid having the government take a rather large chunk of the total value.
Many people try to take advantage of the unlimited amount that they can pass to their spouses without being taxed. However, this fails to take into consideration that the amount will still be taxed at a later date when passed on to the other heirs. The IRS permits any taxpayer to gift up to $1 million over the course of their life without being taxed on it. Each year they are permitted to give several people gifts of up to $13,000 per person. It is beneficial to take advantage of this.
For some people, it is important to leave their heirs with a certain amount of money. Making use of an IRA will allow them to do this and to continue growing their inheritance. This can be a very important part of the planning process. It is much more beneficial to the recipient than simply leaving the lump sum of cash.
Following the death of an individual, there are many different elements with which the survivors must contend including the probate process. This is difficult to understand, however, proper estate planning can greatly help. It may be a good idea to speak with a professional regarding this matter.
Preparing for your beneficiaries financial needs after you are gone is part of “Estate Planning Book” techniques. You can use Federal Income Taxation Real Estate for optimal disposal of your assets.