For those planning for or already in retirement, they realize that putting together a living will isn’t morbid it’s just good planning. Everyone wants to ensure the financial security of their loved ones after they’ve died, and the process can be confusing, if you don’t know what property or funds should be considered. Knowing where to start is key to efficiently planning the bequeathment of property, and if you have various investments to secure for inheritors, here are a few tips to go about beginning this process.
Before you start building your will you need to first ask yourself a few questions.
- What are my long-term goals and how will they affect possible additions to the will?
- How are my investments going to be taxed after death?
- What will I need to consider for division in my will?
Even if your plan is to give your property to charity, you’ll still need to draft a will to avoid legal issues. One advantage of having a living will is that those who stand to inherit parts of your estate will be exempt from paying taxes on any earned income interest. If you don’t specify inheritance in a will, your assets will go into probate and be evaluated by the courts. From the courts, your assets will be taxed and divvied up as the state sees fit. To avoid these issues and maintain control over your assets, draft a living will. This is the most effective long-term strategy you can take to protect your assets and dictate how your various investments are subsequently taxed.
Another option is divvying up your holdings while alive to ensure your money is going where it supposed to be going. If you choose to go this route then you should only give inheritance portions in 13,000 dollar pieces or 26,000 per couple on an annual basis. This way you can bypass gift taxes to the recipients or yourself. One of the disadvantages of this plan is, if you’re giving stocks or other investments with appreciated value, the taxes will be passed along to the recipient. On the other hand, if you want to give your holdings to a charitable foundations, you can receive huge tax breaks and deductions for the next year.
If you’re leaving behind a business to be distributed as a part of the inheritance, the process gets a little more complicated. The biggest mistake people often make is neglecting the preparation process. It’s important to talk to your family and start planning as soon as possible, especially if your family wants to continue the business instead of selling. Talk to a financial advisor to get additional information on how to smoothly hand over your business after you’re gone.
Most of us want to leave behind a legacy for our loved ones, friends, or various organizations. It doesn’t matter how old you are. All you have to decide is what way is best for you. Consider some of these options and start planning your will as soon as possible. The last thing you want to do is leave your loved ones to deal with the stress of financial management in the face of a traumatic loss.