An estate plan is the process of arranging for the disposal of an estate and preparing for the unexpected. If you die, become terminally ill or incapacitated, your estate plan precisely directs how to handle your personal, financial and medical affairs. Your personal estate consists of everything you own – homes, insurance policies, retirement accounts, investments, bank accounts, automobiles, collectibles and other personal assets. Your estate plan gives you control and peace of mind that your assets are going to be passed down as you intended. Without proper planning, state laws dictate what will happen to your personal assets regardless of what you intended to leave to a spouse, child, family member or charity.
Under current laws, diligent planning can reduce your estate taxes. The first $5.25 million of your estate is exempt from federal estate taxes, with all remaining assets subject to a 40% tax rate. Many individuals want to ensure their assets stay in the family. An estate plan can arrange for funds to pay any debts, taxes or expenses you leave behind. This ensures that your loved ones do not incur any of your financial burdens when you’re gone. Putting your loved ones through the tedious process of probate court (also called a surrogate court) after you’re gone is something most individuals want to avoid. Certain estate strategies can avoid a long, expensive probate trial that can cause heartache, family conflicts and loss of privacy for your surviving family members.
Six Steps to Your Estate Planning Process