Create an Estate Planning Strategy
A key misconception when it comes to estate planning is that only people who have large assets should be interested in preparing for the appropriate distribution of their worldly goods. Not true. Everyone has issues and concerns that must be addressed; whether it deals with your money, your physical assets or your quality of life. As we saw recently with the Terri Schiavo case, a living will would have done quite a bit to control that entire situation.
The primary motivation when organizing your estate should be to create documentation, which will highlight your desires for allocating your assets after you depart this world. That's it. It sounds simple; and in many ways, it is. But you should make sure all the 'T's' are crossed and 'I's' are dotted by conferring with a professional estate planner, your lawyer and even members of your family before making any final decisions.
And while you shouldn't let the amount of money you have in the bank or the numbers of assets you have under your roof determine whether or not to plan for the future, your age should also have nothing to do with your decision to get your affairs in order. Whether you're in your 20's or approaching 80, it's never too early or too late to plan for the unexpected.
By the way, in many states, if you have possessions worth more than $30,000, your family could be subject to probate. Each state has specific directives that govern the distribution of assets when someone dies without a will or other plan. If you haven't developed a strategy for the distribution of your estate, it will probably be distributed according to your particular state's laws, which is not always in your best interest.
Talk to a professional and find out what best suits your personal needs. Maybe a more advanced approach would be better for you and your family. Issues like irrevocable life insurance trusts, charitable trusts, family limited partnerships, LLC's and even the creation of private foundations are important techniques that can help when organizing your possessions for distribution. Don't forget that your plan should also help structure your property to receive appropriate and beneficial tax benefits.
You might even consider distributing a portion of your assets to loved ones prior to leaving this world. Everyone is permitted to make gifts of assets valued at up to $11,000 per year to as many persons as desired, without gift tax consequences. The use of annual gifts saves the estate tax on the gifted property and the appreciation on the gifted property escapes taxation altogether. A properly constructed gift giving plan, over a period of time, might also lower your estate tax bracket which would save taxes on the gifted property and on the property you decide to hold on to.
As I've said before, you can successfully complete anything if you get the proper education. No matter how big or small just take a bit of time now to organize and manage your personal estate. Doing so will probably save your family months of headaches and heartaches should the worst happen. After all, it's the responsible thing to do.
Originally published in the Outspoken e-newsletter.