Many people work hard throughout their lives not just to maintain their own standard of living, but also to set their kids up for success. Unfortunately, there are many tax requirements and legal processes that may complicate or otherwise harm your plans for your children, explains a trust lawyer from a law firm like Kaplan Law Practice, LLC. Consider a few tips that may help you build your estate plan in such a way that your assets are passed down as simply and affordably as possible.
1. Document Your Wishes
First and foremost, it’s critical that you record all of your wishes in detail. When writing your will and testament, for instance, be sure to account for your investments, valuable possessions, properties, and all other assets. State who will take ownership of each. Your will should also name a guardian for your children if they are minors when you die.
Other documents you may wish to draft include a durable power of attorney and an advance medical directive. The former clarifies who will take control of your estate and assets if you are alive but unable to make critical decisions. Similarly, your advance medical directive describes your wishes in terms of medical care and gives someone the power to make key health care decisions for you.
2. Create a Trust
In many scenarios, it is advantageous to form a trust. There are several categories of trusts, including living, testamentary, revocable, and irrevocable trusts. A living trust may be a good option for you if you don’t want your estate to be handled in probate court. Testamentary trusts, which only become active after your death, are good options when you want to control how your beneficiaries can use their inheritance.
Irrevocable trusts, which cannot be modified in any way after they are created, often work well for people who are concerned about federal estate taxes. This is because these trusts may not be counted among your personal assets.
3. Give Money Away
Finally, you may wish to consider whether there are good causes that you could put your money towards now rather than paying hefty taxes on these funds down the road. Charitable donations, for example, are tax-deductible. You could also gift sums of money to loved ones tax-free as long as each person doesn’t receive more than $15,000 per year.
If you are ready to begin the estate planning process, be sure to consult an experienced legal professional, such as a living trust lawyer. Those with in-depth knowledge of the legalities surrounding estates can help make sure your wishes are carried out precisely.