Benjamin Franklin said, “But in this world nothing can be said to be certain, except death and taxes.” Many people have taken that quote to heart when thinking of estate planning and think of it as a necessary evil but quite the contrary, estate planning is a crucial tool if you do not want to deal with unnecessary issues either later on in life or post-mortem. Discover below some estate planning strategies that will help be a part of the planning process.
1. Create A Will
This is a basic part of the strategy but one that is also overlooked and ignored. Your Will is a crucial part of your estate and is the groundwork for your planning. Your Will is a legal document in which you declare specifically who will manage your estate, including homes, household items, and furniture after you die. Your Will can also designate whom you wish to become the guardian for any minor children or dependents.
2. Review Estate Planning Documents & Strategies
Reviewing estate planning documents is a crucial part of the process along with understanding all of this documentation, including understanding estate taxes. Most estates will not owe federal estate taxes, but federal government will only impose estate tax if your estate is worth more than $5.43 million. Also, married couples can transfer up to twice the exempt amount tax-free, and all assets left to a spouse are exempt from any federal taxes. Many of these tax laws are confusing, but that is why it is important to plan for an orderly transfer of your assets or for unforeseen circumstances.
3. Create A Power Of Attorney And Health Care Power Of Attorney
The next strategy would be to create a Power of Attorney and Health Care Power of Attorney documentation. They can be the same person but make sure you have a designated backup in case your Power Of Attorney is unable to act in the capacity when/if the time comes. Designating a trusted loved one to make pertinent decisions in regards to your health and livelihood isn’t an easy decision but should be chosen with the best intentions. Your Power of Attorney can make financial decisions, familiar decisions, and more. Your Health Care Power of Attorney may decide medical treatments to be given, directives for care, and other life and well-being decisions.
4. Check Your Financial Account Titles And Update Your Beneficiary Designations
You have handled all aspects of your will set and you will want to check the titling of your financial accounts and update your beneficiary designations. The way an account is titled or a beneficiary is designated is legally significant and can overthrow your estate plan, so you want to assure everything is titled and designated in the way in which you want it to be.
5. Consider Roth IRA/401(k) Contributions or Conversions
When creating an estate plan you will want to consider Roth IRA/401K conversions or contributions. By converting to Roth accounts, it can be an effective way to hedge against the direction of future tax rates.
There are many strategies and personal circumstances to consider when dealing with estate planning so you want to make you consult a qualified legal or tax professional to discuss these types of strategies.
At Magellan Financial, we will help develop a plan to make informed decisions by understanding your financial situation. To schedule an initial consultation or learn more about how Magellan Financial can help you plan successfully, please call us at 610-437-5650 or email Jon Soden, Managing Partner, at Jon.Soden@wfafinet.com.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
Wells Fargo Advisors Financial Network is not a legal or tax advisor.
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