Since your estate will include everything you own at the time you die, you need a plan for what
will happen to those
assets.
Otherwise you can’t ensure that the people and organizations that
you want to enjoy them will receive what you intended. And if your estate is large enough to be potentially vulnerable to federal
or state
estate taxes,
you’ll want to have a plan in place to protect your assets.
The first step in creating an estate plan is to identify what you own, what each
asset is currently worth, and what the total value of your estate is. That will
help you decide if you should be giving away some of your holdings now to avoid
potential taxes later. If taxes aren’t likely to be an issue, you can turn your
attention to identifying your specific
beneficiaries.
Since estate planning involves complex legal and financial decisions, you’ll also want to identify the professional advisers
who can help you make sound decisions. For example, to be effective, your estate planning ideas must be spelled out in
one or more legal documents that will transfer your assets. You can use a will, one or more trusts, or a beneficiary
designation form in certain cases. Just telling people what you want to happen isn’t enough.
Because trusts can be complicated — and costly — to set up, it's important to understand how they can be used to help you accomplish your estate goals.
IN THE NEWS
New 401(k) inheritance rulesThe Pension Protection Act may make it easier to leave your 401(k) assets to a nonspouse beneficiary without triggering a big tax bill.
