Here are four key elements of estate planning that can not only help preserve the value of your estate, but also ensure effective administration and disposition of your estate.
1. The will is the cornerstone of the estate plan and deals with all matters relating to the final distribution of your estate. A will is a legal document that speaks on your behalf when you die. If you do not have a will, the courts will decide how the property of your estate will be distributed – which may not be in accordance with your wishes.
2. A trust is a legal document that can be designed to deal with any unique situation you may have with respect to the distribution of assets in your estate. For example, an expense trust may be created to protect the interests of a beneficiary who is not good at managing money. A trust may be created for the protection and management of the assets of minor children, a spouse or any other beneficiary.
The creative use of wills and trusts can not only protect the interests of your heirs, but also help reduce the impact of taxes and probate fees. A estate planning attorney can help you with the proper legal drafting of wills and trusts. But before using the services of a lawyer, it is highly recommended to start by performing the basic tasks required. This will save you hundreds or even thousands of dollars in legal and accounting fees.
3. Your executor will need to know the location of your assets and vital documents. If you do not have adequate records of your assets and vital documents, valuable assets may be "lost" during the estate settlement process. For example, billions of dollars of unclaimed money currently held by the government are waiting to be claimed by beneficiaries of deceased parents.
4. It is extremely important to understand that most estates generally include assets that are not easily convertible into cash. For example, real estate, long-term financial investments, commercial interests, rental properties and other assets. In other words, most real estate assets are generally illiquid.
Without appropriate financing arrangements, it is highly likely that valuable real estate assets will be liquidated at incendiary selling prices in order to pay taxes and other estate settlement fees. These expenses can easily reach thousands or even millions of dollars in the case of large estates. There is a smart way to finance estate settlement expenses without having to liquidate valuable assets by creatively using life insurance.
By implementing the estate planning strategies above, you can ensure that all your business is well organized and, depending on the size of your estate, you could potentially save thousands or even millions of dollars. Your heirs will be proud and happy that you have made all the necessary arrangements and that all your belongings have been left in excellent condition. To learn more about estate planning, please check the box below.