6 Estate Planning Steps To Take That Can Save Your Family Money

Nov 25, 2023 | Estate Planning

Protecting your family through estate planning is important for their financial security. Some people avoid estate planning because they think it will be too expensive, but in this article, we will discuss six steps you can take that can actually save your family money in the long run! By working with a lawyer to put estate planning strategies in place, you can secure your family’s financial future and get peace of mind. 

1 – Draft A Will

When it comes to planning your estate, there is a crucial document that should not be overlooked – the will. This legal document serves as a blueprint for how you want your assets to be distributed after you pass away. The presence of a well-drafted document yields numerous advantages for both yourself and your loved ones.

First and foremost, having a will allows you to explicitly outline who shall inherit what from your belongings, ensuring that no disputes or ambiguity arise regarding the division of your estate. By doing so, potential conflicts within the family – which may otherwise lead to expensive court battles – can be avoided altogether.

Additionally, appointing an executor through one’s will proves highly valuable in expediting the probate process while preventing any unnecessary delays or extra fees. In contrast, without such provisions in place, someone appointed by the court might handle affairs according to their own judgment instead of adhering strictly to your wishes.

To ensure all important aspects are covered and nothing is overlooked when drafting this essential document, enlisting an experienced estate planning attorney becomes indispensable. An attorney possesses extensive knowledge about state laws governing these matters and can guide you through each step involved in creating a valid, comprehensive will tailored specifically towards those regulations.

2 – Update Your Beneficiaries

Regularly reviewing and updating the designated beneficiaries on your retirement accounts, life insurance policies, and other financial accounts is essential for ensuring your assets are distributed according to your wishes. Updating beneficiaries is especially important after significant life events such as the birth of a child or divorce, as these changes can impact your desired distribution of assets.

By designating beneficiaries on your accounts, you can bypass the probate process (which can add up to be hundreds or thousands of dollars in legal fees) and ensure that your assets go directly to the intended recipients. This can save time and minimize expenses associated with probate. 

Steps To Update Your Beneficiaries

To update your beneficiaries effectively, follow these steps:

1. Identify all financial accounts and policies that have beneficiary designations, such as retirement accounts, life insurance policies, and payable-on-death (POD) bank accounts.

2. Review the current beneficiary designations on each account and policy to ensure they align with your current wishes.

3. Contact the appropriate financial institutions or insurance providers to request the necessary beneficiary change forms.

4. Complete the forms accurately, providing the updated beneficiary information.

5. Submit the completed forms to the respective institutions or providers, ensuring they are processed and updated in a timely manner.

Regularly reviewing and updating your beneficiaries ensures that your assets are distributed according to your wishes and can provide peace of mind knowing that your loved ones are financially secure in the future. An estate planning attorney can take care of these steps for you!

3 – Create A Living Trust

A living trust is a tool used in estate planning that offers a range of advantages for you and your family. By establishing a living trust, you can effectively manage and distribute your assets both during your lifetime and after your passing, all while bypassing the probate process.

One key benefit of a living trust revolves around preserving family wealth. By transferring your assets into the trust, you can minimize estate taxes and safeguard your wealth for future generations. The trust serves as a structured framework for managing these assets, guaranteeing that beneficiaries receive their inheritance in an organized manner. This ensures the seamless transmission of wealth to loved ones without any court involvement or public scrutiny.

Moreover, a living trust provides flexibility when it comes to asset distribution. You have the ability to set specific conditions for inheritance, such as age or achievement milestones, ensuring that beneficiaries are financially responsible and capable of handling their bequests responsibly. This feature safeguards the financial well-being of your family and prevents the reckless dissipation of assets.

Compared to wills, living trusts afford greater privacy. Since trusts avoid probate procedures altogether, information regarding your assets and beneficiaries remains confidential. For individuals who cherish their privacy or possess intricate financial circumstances, this aspect holds particular importance.

To establish a living trust successfully, seeking guidance from an experienced estate planning attorney is highly recommended. Trusts can be complicated to create – an attorney can tailor the trust without mistakes according to your individual needs and aspirations.

4 – Convert Traditional Retirement Accounts To Roth Accounts

If you have traditional retirement accounts, such as IRAs or 401(k)s, consider converting them to Roth accounts as part of your estate planning strategy. There are several benefits to converting traditional retirement accounts to Roth accounts:

  • Tax-Free Distributions: By converting to Roth accounts, your heirs can receive tax-free distributions, which can provide them with greater financial security and potentially save them money in taxes.
  • Flexibility in Retirement: Roth accounts do not require mandatory minimum distributions during your lifetime, allowing you more flexibility in managing your retirement income.
  • Reduced Estate Taxes: Converting to Roth accounts can help reduce the value of your estate, potentially minimizing estate taxes that your heirs may have to pay.

While converting to Roth accounts can be beneficial, it’s important to weigh the potential tax implications and consider your overall financial situation.

5 – Gift Your Money While You’re Alive

A valuable tactic for managing your estate is to consider giving away your money before you pass away. By bestowing tax-free gifts of up to $17,000 per person each year, you can decrease the overall worth of your estate and potentially avoid incurring estate taxes. This method allows you to transfer wealth to those dear to you while minimizing any potential tax ramifications. Gifting presents a strategic approach that ensures your family’s financial stability and grants them immediate access to funds.

It is crucially important to seek advice from an experienced estate planning lawyer who can guide you through the intricacies of gifting. They possess the knowledge necessary to navigate legal requirements and assist in crafting a gifting strategy customized to meet your financial circumstances and objectives. Furthermore, they will provide counsel on possible tax implications and aid in structuring gifts in the most advantageous manner.

By proactively donating your assets during your lifetime, not only do you have the privilege of witnessing firsthand how your generosity positively impacts others, but you also leave behind a lasting legacy of financial security for loved ones. Seize this opportunity within estate planning, as it offers maximum advantages for both yourself and those close to you.

6 – Hire A Professional

Given the various legal and financial considerations involved, creating an all-inclusive estate plan can be a difficult undertaking. That is why it is critical to get advice from a knowledgeable estate planning professional. These professionals have the resources you need to help you create important documents, understand complex legal concepts, and make important financial decisions. With their assistance, you can have peace of mind knowing that your estate plan meets all legal requirements while also aligning with your long-term goals.

With an attorney to guide you, you can create a tailored estate planning strategy that will help you and your loved ones avoid the probate process, minimize taxes, and preserve your legacy. 

Call ProvenLaw For Your Estate Planning Needs

You need to act right away to put the safety of your belongings and family front and center – tomorrow isn’t guaranteed for any of us! To help you create a comprehensive plan that includes all proposed strategies for protecting your family and assets, turn to ProvenLaw, a dedicated team of attorneys who focus in estate planning and possess the knowledge necessary to do so. Please contact us as soon as possible for a no-cost, no-obligation initial consultation so that we can begin constructing the perfect estate plan designed specifically for you! 

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