Putting solid plans into place for your estate and the distribution of your assets is absolutely critical for your heirs, but also for tax purposes. Careful planning will allow you to avoid taxes and save as much money as possible! It isn’t always easy to make decisions regarding your estate, but there are skilled CPAs available to help you craft a perfect plan!

What is Estate Planning?

In order for you to understand what estate planning entails, you have to know what makes up your estate! An estate isn’t a particular physical possession, but is the term given to the collection of items and assets you own. Everything you’ve ever purchased and invested in is considered part of your estate. That silly police officer cookie jar you bought on a whim years ago? Yeah, that is part of your estate too!

If you’ve ever heard of an estate sale, then you’d know it is a sale of all the possessions a recently deceased person once owned. This person likely didn’t have an estate plan in place, which leads to the free-for-all fire sale you’ll find at an estate sale.

To make arrangements for all of your possessions and assets, you’ll need to make some solid estate plans. Estate planning is making arrangements for how your assets are distributed after you pass away and to whom they are distributed. A common document resulting from estate planning is a will, which details who gets what and how.

With that in mind, estate planning can be viewed as a stressful topic. Nobody wants to think about their own passing, but failing to put a solid estate plan in place can be disastrous! You worked hard your entire life to acquire everything you own. Don’t you want to make sure it all goes to loving children and grandchildren?

Significance of Your Estate

Your estate contains a lot – your entire life to be exact! Because of this, it becomes one of the most important aspects for you to manage. You might think estate planning is just for old or sick people, but the harsh reality is that, no matter how healthy you are today, you simply never know what tomorrow will bring. Life is incredibly fragile, and accidents happen everyday.

Because you just can’t predict the future, it is important to at least be prepared for whatever may occur. This is why planning for your estate is crucial. You may very well live another 30-40 years (fingers crossed!), but the peace of mind you’ll gain by knowing your estate will be properly distributed is priceless.

One thing you might not be aware of is what happens to your estate in the event you don’t have a plan for it. An estate sale is just one example of what can happen but, if you don’t have an estate plan in place, your assets will be distributed according to the specific probate laws for the state in which you lived. This is often distributed to your descendents and spouse, but percentage shares don’t always work out in a reasonable fashion.

If you consider that idea, it becomes clear that you need to put a plan in place so your estate is distributed exactly how you believe it should be. Not only will this put you at ease, but it will also simplify any questions that arise when it comes to filing taxes. An excellent estate plan will avoid costly tax situations to ensure that as much of your hard-earned assets go to your recipients as possible rather than shelling some of it out to the government.   

Benefits of Excellent Plans

Not only is an estate plan critical to have in place for the well-being of you and your family, but it also comes with direct benefits. Here are some of the greatest results you’ll experience with excellent estate planning:

  • Clear Organization – You might have a great idea of where your financial documents are located, but that doesn’t mean your family does. This will allow everyone to understand where important files are located, eliminating frustration later on.
  • Correct Distribution – Possibly the biggest benefit of estate planning is that you can decide exactly how your assets are distributed. This will allow you and your family to decide on a fair split that you deem appropriate. You’ll still have to respect state probate laws, but this can be avoided if you opt for a livable trust with a revocation option.
  • Transparency – This may not seem like a huge benefit right now, but it will become quintessential when you do pass away. The period following a death is always rife with emotion, so you want to make sure everything is clear and easy to understand. Make sure language explicitly indicates who will receive what and how those assets will be distributed. This will save your family a ton of headache and frustration later on.
  • Tax Savings – Yes, the distribution of your estate comes with tax situations. Some of your recipients may have to pay taxes on what they receive, but you can help to minimize this with careful planning.
Find an Excellent CPA to Help!

It really doesn’t matter what your financial or health situation looks like. Everyone can benefit from great estate planning! The highly unpredictable nature of life creates an environment in which we never know what will happen next. The last thing you’d want to think about before you pass is how you never set up an adequate plan for the distribution of your possessions.

The easiest way to put yourself and your family at ease is to draft an estate plan. You’ll need to take a look and really analyze your financial situation to see where everything would be best distributed. Depending upon what you choose, there may be tax implications that could cause costly fees later on.

Because of how complex estate planning can be, one of the biggest tools at your disposal is the expert advice a CPA can give you! They can give an educated look at everything you own and help you decide how best to set everything up! They can also help you draft a will or trust, ensuring your family will be well-taken care of in the unfortunate event you pass.