Estate planning can be a huge relief for you and your loved ones. A quality estate plan means a sense of security that your family and other important people in your life will be provided for at the time of your death.
You’ve worked hard for what you have, but the saying is all too true: you cannot take it with you when you die. So, you may as well pass along your assets through an airtight estate plan to people you care about, as opposed to the government.
To that point, there are important, not-so-obvious benefits of an estate plan, such as avoidance of specific taxes and fees.
Here are several ways to get the best benefits out of your estate planning:
Federal estate tax
The federal estate tax applies to high net worth individuals; for 2018 the estate tax exemption is $11.2 million/individual (up from $5.49 million in 2017 due to the new tax law). What does that mean exactly? It means that any one individual could leave up to that amount to heirs and pay no federal estate tax. For married couples, the limit is $22.4 million. These are important rates to know because estate taxes can be as high as 40 percent. (Which is pretty harsh!) The good news is that smart estate planning strategies exist to legally avoid the federal estate tax.
Customized estate planning
Without a customized estate plan, you and your estate may end up paying more in the long run in professional fees, court costs, and taxes. A customized estate plan is essentially a thorough plan that takes these potential future charges into consideration. It includes elements such as a managed distributions, which can help alleviate much of the tax burden on your beneficiaries.
A customized, smart, up-to-date estate plan can mean your estate avoids court costs almost entirely. Optimally you want to avoid the worst case scenario (aka litigation) with certain estate planning provisions.
Professional fees can include costs for services provided by accountants and lawyers. Using a flat rate with an attorney will be much more straightforward and to your long-term economic advantage. Why? Paying someone on the front end means less work and hassle down the road when your family is coping with your passing.
Allocating charitable contributions
This is my favorite strategy for avoiding a large brunt of taxes and fees. Mutually beneficial for both nonprofit organizations and estate beneficiaries, charitable contributions are a way to secure a lasting legacy, make a tangible community difference on the way out, and secure helpful tax deductions.
There is no one-size-fits-all approach to estate planning, and a legal professional can help you identify financial advantages and benefits. (Yet another reason why you need a reputable attorney to craft your estate plan.)
Have questions? Need more information?
Click here to download my free, no-obligation Estate Plan Questionnaire or feel free to reach out any time. You can contact me by email at Gordon@gordonfischerlawfirm.com or give me a call at 515-371-6077.