Best Time to Develop An Estate Plan
The most effective estate planning occurs while the person is alive and mentally alert. Some estate planning documents may be disputed if executed during a diminished mental state. Additionally, abruptly asking someone to act as your agent immediately after you have been diagnosed with a serious illness may add to an already stressful and emotional situation. The best estate plans allow time for flexibility, evolution, forethought and afterthought. Planning in advance will ultimately save time and money, and help avoid unpleasant surprises.
Estate Planning Benefits During Life
Some people believe that estate planning only affects people upon their death. In reality, creating a truly effective estate plan requires preparing for uncertainties that may occur while you are alive. Documents such as health care proxies, living wills and powers of attorney, gives individuals you chose the power to make health care and financial decisions on your behalf while you are incapacitated. Taking advantage of government benefits such as Medicare and Medicaid requires several years of planning prior to receiving optimal benefits. Additionally, taking full advantage of long-term gifting and charitable giving strategies allows you to minimize income and gift taxes during your life, thereby allowing you to optimize future distributions from your estate.
Estate Planning Benefits After Life
Many questions arise for those who are thoughtful enough to appreciate the significance of the assets that survive them: What are the best ways to leave as much of your estate as possible?
- How can you help those whom you believe should receive your estate save money on estate and income taxes?
- Who will take care of your minor children if you die unexpectedly?
- How can you protect your beneficiaries from creditors and their possible personal weaknesses?
- Which strategies should you utilize to ensure that your legacy is honored as you desire?
- What steps should be taken if a beneficiary is a minor at the time of your death?
Proper estate planning can be accomplished by correctly utilizing wills, trusts and advanced guardianship directives. Other strategies may include owning certain assets jointly with a spouse or child, creating “TOD” / “POD” / “ITF” accounts, holding property in family limited partnerships (FLPs) or limited liability companies (LLCs), or ensuring beneficiaries are properly designated for your retirement plans.