(Off Plan Property Exchange) - When you pass away, it is important to have your estate planning in order to ensure your loved ones are taken care of financially. However, only one in three Americans have an estate plan. It is never too late to start the process and get ahead. Creating a personalized plan is crucial as there is no one-size-fits-all solution to estate planning.
Financial advisor Blake Whitten recommends considering various factors such as financial goals, risk tolerance, tax situation, and family circumstances when determining the best assets to leave for heirs. He suggests working with a knowledgeable financial advisor or estate planner to navigate the complexities effectively, especially considering the varying tax implications depending on the country of residence.
Here are nine common assets to consider when planning your estate:
1. Estate Planning and Trusts: Creating a revocable living trust can help avoid probate, minimize estate taxes, and maintain privacy.
2. Life Insurance: Life insurance policies, particularly whole life or universal life policies, can provide a tax-free death benefit to beneficiaries.
3. Real Estate: Property ownership, including homes and rental properties, can be valuable assets to pass on to heirs as they tend to appreciate over time and can generate ongoing income.
4. Stocks and Bonds: Equities and fixed-income investments can provide potential long-term growth and income. Gifting or transferring shares to heirs can take advantage of stepped-up cost basis rules and potentially reduce estate taxes.
5. Retirement Accounts: Leaving traditional IRAs, Roth IRAs, or 401(k)s to heirs allows them to inherit tax-advantaged accounts. It is important to consult with a financial advisor to understand the implications, especially with the rules governing inherited retirement accounts changing in 2020.
6. 529 College Savings Plans: Contributing to a 529 plan can support the education of children or grandchildren while taking advantage of potential tax benefits.
7. Annuities: Certain types of annuities offer guaranteed income streams that can be passed on to beneficiaries.
8. Business Interests: Planning for the succession of a business is essential. Transferring ownership to family members or key employees can ensure its continuity.
9. Cash and Liquid Assets: Leaving cash and other liquid assets gives heirs flexibility and immediate access to funds for various needs or emergencies.
Estate planning is a personal process. Consulting with a financial advisor can help ensure your affairs are in order so you can provide for your loved ones after you pass away.
