Start Estate Planning As Soon As You Have A Measurable Asset Base
What Is Estate Planning?
Estate planning is the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death. The planning includes the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an estate planning lawyer in NJ.
Understanding Estate Planning
Estate planning involves determining how an individual’s assets will be preserved, managed, and distributed after death. It also takes into account the management of an individual’s properties and financial obligations in the event that they become incapacitated.
Assets that could make up an individual’s estate include houses, cars, stocks, artwork, life insurance, pensions, and debt. Individuals have various reasons for planning an estate, such as preserving family wealth, providing for a surviving spouse and children, funding children’s or grandchildren’s education, or leaving their legacy behind to a charitable cause.
The most basic step in estate planning involves writing a will. Other major estate planning tasks include the following:
· Limiting estate taxes by setting up trust accounts in the names of beneficiaries
· Establishing a guardian for living dependents
· Naming an executor of the estate to oversee the terms of the will
· Creating or updating beneficiaries on plans such as life insurance, IRAs, and 401(k)s
· Setting up funeral arrangements
· Establishing annual gifting to qualified charitable and non-profit organizations to reduce the taxable estate
· Setting up a durable power of attorney (POA) to direct other assets and investments
Writing a Will
A will is a legal document created with the help of a NJ estate planning lawyer, to provide instructions on how an individual’s property and custody of minor children, if any, should be handled after death. The individual expresses their wishes through the document and names a trustee or executor that they trust to fulfil their stated intentions. The will also indicates whether a trust should be created after death. Depending on the estate owner’s intentions, a trust can go into effect during their lifetime (living trust) or after their death (testamentary trust).
Appointing the Right Executor
The legal personal representative or executor approved by the court is responsible for locating and overseeing all the assets of the deceased. The executor has to estimate the value of the estate by using either the date of death value or the alternative valuation date, as provided in the internal Revenue Code (IRC)
Planning for Estate Taxes
Federal and state taxes applied to an estate can considerably reduce its value before assets are distributed to beneficiaries. Death can result in large liabilities for the family, necessitating generational transfer strategies that can reduce, eliminate, or postpone tax payments.
Using Life Insurance in Estate Planning
Life insurance serves as a source to pay death taxes and expenses, fund business buy-sell agreements, and fund retirement plans. If sufficient insurance proceeds are available and the policies are properly structured, any income tax on the deemed dispositions of assets following the death of an individual can be paid without resorting to the sale of assets. Proceeds from life insurance that are received by the beneficiaries upon the death of the insured are generally income tax-free
Start Planning Your Estate As Soon As Possible.
Estate planning is an ongoing process and should be started as soon as an individual has any measurable asset base. As life progresses and goals shift, the estate plan should shift in line with new goals. Lack of adequate estate planning can cause undue financial burdens to loved ones. Seek the guidance of a reputable law firm like Klenk Law and talk to a NJ estate planning lawyer today.