You don’t have to be a John D. Rockefeller or a Conrad N. Hilton to benefit from estate planning. Every high-income and middle-income earner amasses assets – home, stocks and shares, business interest, retirement plans, IRAs and much more.
Without estate planning, these assets could be lost to estate taxes. Typically, in 2016, a top federal gift and estate tax of 35 percent is imposed on transfers in excess of $5.45 million estate and gift tax exemption
Consider this: if the rich and the famous lost more than half their estate, imagine what percentage you could lose.
- J.P. Morgan lost almost 69 percent of his net worth through the estate tax.
- John D. Rockefeller lost almost 64 percent of his net worth through the estate tax.
- Robert F. Kennedy lost almost 63 percent of his net worth through the estate tax.
- Conrad N. Hilton lost almost 53 percent of his net worth through the estate tax.
- Joseph Robbie, owner of the Miami Dolphins, lost almost 45 percent of his net worth through the estate tax.
Estate planning is an important part of preparation for the future protection of your family by protecting your assets after you pass on. It’s a subject that is often avoided because of the negative inference, but it is a subject that everyone needs to pay some attention to.
You do not want the state to become the executor of your estate, ever
Many people only think about estate planning as they approach retirement age. It is important though to look at estate planning much earlier. As soon as you start earning money, acquiring assets as a professional, and certainly when you start a family; you need to begin to plan ahead to prepare for the inevitable. Death is inevitable and estate planning plays an important part in relieving your loved ones of difficult decisions during their grief.
Estate Planning In a Sentence
Estate Planning is a list of instructions that YOU prepare as to how you want your assets to be divided after your death.
The list of instructions about your estate forms part of your will and will be used as the foundation for the executors of your estate when you pass on. The list of instructions will cover all of your assets and can be a complicated legal document, especially when it comes to estate taxes and money that may be due to the federal government by your heirs. Your estate planning takes care of all of that.
How Does Estate Planning Start?
Just because you have a will and think you’ve taken care of your assets doesn’t mean that your estate can avoid the process of probate. When you die, your estate has to go through probate at a state level. If you own property, for example, in two states, you will face probate in each state that you hold assets in. Complicated and convoluted; while it might seem like a legal and financial nightmare, the laws are actually there to ensure that everyone (including the government and IRS) gets what is due to them. Using a professional to prepare your estate ensures that this happens. Probate is open to the public and can take anywhere from nine months to two years depending on the court system and how well you did your estate planning before your passing.
A revocable living trust can help you avoid lengthy probate in your state. It provides for a set of instructions that you can change. It ensures your privacy and helps to ensure that your wishes are carried out exactly. Estate planning also helps to organize your financial affairs. Something as simple as having your title deeds, bank account details and copies of all investments are held in your living trust so that your beneficiaries and loved ones do not have to try and find them after your passing.
Your Estate Planning Should Include
All of your life insurance policies will provide for your family immediately upon your passing. You want your family to have immediate access to funds for funeral planning and monthly expenses. Remember that your estate is not only a set of instructions about what happens after your death, but can also be used if you become ill or incapacitated for any reason. Your estate speaks for you when you are no longer able to speak for yourself. Your estate deals with guardianship of minor children, trusts and income for minor children and who will be in control of their money until they come of age. It can provide care instructions for members of family who have special needs as well as being an important document if you run your own business or are a professional such as a doctor or lawyer.
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