One good rule of thumb is that it’s better to be prepared than not. Life comes with many surprising things, so you want to be equipped for all of life’s challenges, not just for you but also for your family. Planning an estate is the best way to prepare you and your family for life’s surprises. If executed properly, your family could be free of financial and emotional stress after you pass. Gather up a group of people you can trust like your lawyer from Boulder Legal Group, your top financial advisor and your tax expert. Or if your situation is simpler, consider using an online service to help prepare you Will. Whatever you do don’t just assume nothing will happen and leave this world without a plan! Here are some estate planning tips that will leave a positive legacy for your family:

Have a Will

This is an obvious first step. It is important that you clearly spell out how you would like your property and other assets distributed. If you fail to do this step, your possessions will be subject to being divided into probate court. This is a very costly process and your loved ones will be left to pay for it. You can avoid all of this if you just grab your lawyer and write up a will. You do not have to wait until your on your deathbed to write up a will. You can write one up right now as long as you revisit it often as the laws change over time.

Mrs. Money and I got a Will after the arrival of BabyMoneyFinance. We felt fine leaving everything to the other spouse but the question now was what happen if we both passed away. It was simple and fairly easy to get one written up for us and although we used an online service, we will probably get more formal as our life situation continues to get more complex.

Know Who Your Beneficiaries Are

There will be some assets that you have that cannot be distributed through a Will. For these types of assets, you want to check and double-check who are your beneficiaries. These are things like retirement funds and life insurance policies. If you do not name your beneficiaries, it will be taken to probate court and the decision will be left up to the judge on who should control or have access to your assets. Once again, don’t leave it up to some random judge, that is not what you want. Leave that for your family or someone who you love. That is why it is important to check who the beneficiaries are. It’s also important to list contingent beneficiaries aside from just the primary.

Set Up A Trust

This can be a good option, especially if you have a big enough estate or you think your heirs will not use the money responsibly. When you set up a trust, you can appoint a trustee who can properly give out your wealth in increments or at a certain time that you dictate. There are different types of trusts out there that you can set up, but the kind with the most tax benefits are the trusts that are irrevocable. That means that the asset that you are giving away will no longer belong to you but to the trust. Since that asset belongs to the trust, you will not be subject to estate tax.

Transition Traditional Retirement Accounts To Roth Accounts

Traditional retirement accounts come with huge tax bills as regular income taxes have to be paid on distribution. There is a loophole to this as long as the traditional retirement has been liquidated within 10 years after death. You can avoid all of this by simply transitioning your traditional accounts to Roth accounts. Of course there are tax implications now switching to a Roth but something to consider!

Summary

Death is one of the few guarantees in life and we don’t know when or where it’ll happen. Even if you’re single, it’s not the worst idea to have a Will and give some thought to how you’d like your assets distributed upon your demise. It’s never to early to start making a plan!

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