Estate planning can be a daunting task that some people avoid their whole life, leaving their family to wonder what their wishes might have been. An effective estate plan can be extremely valuable, as it helps you communicate your wishes, reduce your tax burden and distribute your assets to the people and organizations most dear to you.
Important steps to take in creating an estate plan include preparing and executing estate documents, creating a list of your assets and liabilities, assessing your goals, and selecting a personal representative.
The first step is to prepare and execute important documents, such as a will, power of attorney, health care directive, and trusts, if necessary to carry out your plan. Your will is the initial document you create. A will specifies final wishes, who you’ve chosen to carry out your plan, how your assets will be distributed, and it establishes any trusts you have specified.
The next step is to create a list of your assets and liabilities. Assets may include real estate, investment accounts, bank accounts, business interests, retirement accounts, and personal property, for example. Liabilities can include loans, mortgages, and credit card debt, to name a few examples.
Creating a list of your assets and liabilities helps you to gain a big picture understanding of your estate. It can also help determine if your estate has a filing requirement for federal or state purposes.
When creating your estate plan, it is important to consider your goals. If one of your goals is to provide for a surviving spouse, establishing trusts may be important. Other goals may include minimizing estate tax, funding trusts, or giving to charity. Your estate documents can provide specific detail on how you want your goals carried out.
There are several individuals who are eligible to serve as a personal representative, including family members, friends, attorneys, accountants, or a corporate trustee. The person you select to serve as your personal representative works closely with your professional advisors to provide documents and information for the filing of the estate tax return. The personal representative also plays an important role in carrying out your final wishes.
Not only is it important to create a plan and communicate your wishes with your personal representative and beneficiaries, but it’s also crucial to review your estate plan regularly to make updates based on changes in assets, liabilities, goals, family members, or tax law. Boulay advisors are available to provide guidance on creating and updating your estate plan. Contact us to learn more.