When most people think of financial concerns, settling debt or making sound investments are what commonly comes to mind. Not everyone is concerned about estate planning, but if you have kids or loved ones, you must start setting your affairs in order so that you can make the most of the estate that you’ll leave behind. Here are four things to consider.
Take stock of everything
You won’t be able to maximize your estate value without first taking stock of everything you own. This includes assets such as your home and other properties, cars, savings accounts, shares of stock and other investments, insurance plans, and so on. It also includes liabilities; did you take out a loan to pay for your latest car or home renovation? How many credit cards do you have, and what’s the outstanding balance on each line of credit? By measuring assets against liabilities, you’ll gain a firm grasp of the potential value of the estate you’ll leave behind.
Before any part of your estate can be passed on to your beneficiaries, it must pass through the checks of federal and state law. If you’re not careful, a substantial amount could be lost to cover taxes, probate fees, court fees, and other expenses.
Working with an expert advisor who can help you successfully navigate the complexities of taxation compliance through advanced planning strategies can be well worth the investment through all the savings you get from minimizing estate and inheritance taxes.
Pay off debt
Your children won’t be inheriting your debt, but your creditors can come after your assets to cover any outstanding debts you may have. This will effectively reduce the value of your estate. As you’re still living – and presumably in a position to balance your books – there is no better time to take action and settle off any existing debts, especially the mortgage on your home, which your children may have to continue paying if they’ll be living in it.
While you’re at it, you may want to review your spending habits; getting (and staying) out of debt is no easy task. Discipline yourself against impulse purchases, and make a point of paying the full amount due on your credit cards every month.
Draft and review your will
Statistics generally show that millennials are less likely to have drawn up a will. However, even if you’ve drafted one, try to review it regularly – once every five years, for instance. Your life circumstances – civil status in particular – may have changed; your children may have different needs. The person you named as trustee may no longer be your preferred candidate to take on such a responsibility. Even the law concerning property inheritance and applicable taxes may change in the future. Drawing up your will is influenced by your current situation, and as the years go by, you should always account for the fact that needs and relationships don’t remain constant. Think things over and make revisions if necessary.
No matter what demographic you belong to, you may have more significant assets than you realize, and loved ones you’d like to bequeath something to. Take on the responsibility of organizing your estate so that you can provide for their future, and save your family the ordeal of having to sort things out while in a state of grieving.