Estate Planning is More Than Minimizing Taxes

You might think of estate planning as simply putting away money to reduce your yearly taxes. In actuality, it is so much more than that. It is a crucial step toward securing your legacy. Unfortunately, death and money are almost forbidden family subjects, yet some frank discussions with children (or parents) can prepare everyone for the unexpected.

Here are some of the other items to consider as you prepare:

Your Will
This document directs how assets are distributed from your estate and can be used to designate legal guardians for dependents. You, not the courts, should make those decisions. Your will also names the person (executor) you wish to oversee the estate until all assets are distributed and officially closed. Be sure key family members can find all of your essential documents. Choose someone capable of understanding and carrying out your wishes.

Retirement Accounts
Carefully choose the beneficiary of your retirement plans, including IRAs. In most cases, the person receiving your retirement plan assets is determined by the beneficiary form you sign, not your will.

Irrevocable Life Insurance Trusts
Life insurance proceeds are not subject to income taxes but may result in estate taxes if your estate is the beneficiary. Speak with a qualified attorney to learn how a life insurance trust may help keep proceeds out of your estate and taxes to a minimum.

Power of Attorney for Finances
This document enables someone you designate to handle your finances and investments if you become incapacitated and unable to make your own decisions. Without it, it may be necessary to go to court frequently just to handle routine transactions. Choose someone you trust who is capable and knowledgeable such as an adult child, sibling, or friend. If you do not have someone like that, consider your attorney or accountant.

Medical Directives
These documents take precedence if you are not capable of making health care decisions for yourself. A durable power of attorney for health care gives another person the ability to make medical decisions. A living will conveys your wishes for care if you become terminally ill to your family and medical personnel. It also states your preferences about being placed on life support.

Make Time for Regular Planning Checkups
Many estate attorneys suggest a review of your documents every three or four years. If your situation changes (divorce, death of a spouse, birth of children or grandchildren, changes in wealth status), you may want to review your plan more often.

Estate laws are complex, and the consequences of being inadequately prepared are significant. While you may want to do some investigation independently, it is wise to use a qualified attorney for your estate planning needs.

Interested in a Complimentary Consultation?
Contact our Wealth Management Department at 713-595-7432
or email us to schedule an appointment.

*Consult a tax advisor for how such decisions may affect you or your estate based on your particular set of circumstances.

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