ESTATE PLANNING TIPS TO KEEP YOUR MONEY IN THE FAMILY

If you’re single and die in 2020, you can have up to $11.58 million in assets before your heirs have to worry about paying a penny in federal estate taxes. 

Knowing that, you might assume only the super wealthy need to worry about estate planning. However, financial planners say you’d be wrong to think planning is only necessary if you’re rich.

“Estate taxes are only part of it,” says Jeff Bush, president of Informed Family Financial Services in Norristown, Pennsylvania. “ Often, there are income tax ramifications.” For instance, your heirs may be responsible for paying federal income taxes on retirement accounts.

And don’t forget that there are some States that have their own estate taxes.

Meet with an experienced estate planning attorney to review these complex issues surrounding your family estate planning.  At The Mendez Law Firm, we’ll discuss with you how taking the following actions can help you and your family: 

Draw Up a Will

This should be one of your first topics to discuss.  I’ve heard many people who’ve come to consult with me say “I don’t have a Will because I don’t have enough assets.”  In fact, only 32% of people say they have a Will, according to the 2020 Estate Planning and Wills Study that was based on a survey of 2,400 Americans. Of those who didn’t have a will, 30.4% said it’s because they thought they didn’t have enough assets to warrant one. However, without a will, your estate will be divided according to your State’s laws on Intestacy.  This means that someone could receive assets of yours that you never meant.

Once a Will is drawn up, it should be reviewed regularly. Why? because your family can change over time… and so can your State’s laws.  You will want your Will to be current with your circumstances.

Always Check Your Beneficiaries

There may be a portion of your assets that will pass directly to your beneficiaries, such as retirement funds and life insurance policies, if you have set out your beneficiaries in a “Beneficiary Designation Form” from the entity holding your asset.  Your estate planning attorney should check these forms to ensure that you have named your beneficiaries correctly.  You can even name your family living trust if you have created one, as the beneficiary of your assets.  Check your beneficiaries for your estate assets. Your named beneficiaries will supersede whatever you have set out in your Will or Trust.  For that reason, it’s absolutely necessary to review your beneficiary designations especially after every major life change, such as the birth of children, a new marriage, and a divorce.

Set Up a Trust

If you want to avoid the expense and time of Probate, have your estate planning attorney set up a family revocable trust.  With a revocable living trust, you still have complete control over your assets while you are living.  You can also name a person you have known to serve as your Trustee once you pass away.  Your Trustee will distribute your assets as you have instructed in your Trust.  That way, you won’t have to be worried that your heirs won’t get the assets you have set aside for them.

Besides a revocable Trust, you can also set up an irrevocable Trust.  Irrevocable Trusts are ususally used for estate tax mitigation and asset protection on larger estates.  That’s because when assets are transferred into an irrevocable Trust, the assets no longer belong to you. They belong to the Trust itself. As a result, the money cannot be subject to estate taxes. While a trustee in an irrrevocable Trust ultimately controls your assets inside the Trust, you have the power to draft the terms of your irrevocable Trust, and can add various clauses concerning the assets.  A Trust Protector can even be added for some additional security over your assets place inside an irrevocable Trust.

One of the biggest advantages of having a Trust is that your assets transferred into the Trust avoid Probate.  Further, Trusts are privately administered and do not involve the public nature of the Probate Court system.

You’ll want to consult with an estate planning attorney to determine how best to create a Trust that meets your goals for your family and loved ones.

Give Your Money Away While You’re Alive… But Wisely

One of the best ways to ensure your money stays in the family is to simply give it to your heirs while you’re alive. As of 2020, the IRS allows individuals to give up to $15,000 per person per year in gifts. If you’re worried about your estate being taxable, those gifts can help bring down its value . The money is also tax-free for recipients. 

However, be careful about giving away assets that appreciate in value such as stocks or a house. Normally when you pass away, those assets get a step-up in basis. That means the taxable amount of an asset is adjusted upon the owner’s death and, as a result, it may be beneficial to transfer certain assets after death rather than before. Speak to a tax professional for guidance in this area. 

Another way to reduce your estate value is through charitable donations. Rather than giving a one-time gift, consider setting up a donor-advised fund. This option would give you an immediate tax deduction for money deposited in the fund and then let you make charitable grants over time. A child or grandchild could be named as a successor in managing the fund as well. 

Complex strategies and the ever-evolving tax code can make estate planning feel intimidating. However, ignoring it can be a costly mistake for your heirs, even if you don’t have a lot of money in the bank.

Your East Orlando Estate Planning attorney can review your Estate Planning questions with you. Call The Mendez Law Firm at (407)380-7724 or email us at mail@themendezlawfirm.com . The Estate planning consultation is FREE, and there is NO obligation. 

Conveniently located in the East Orlando area. Call The Mendez Law Firm TODAY at (407)380-7724 or email us at mail@themendezlawfirm.com to schedule your FREE Estate Plan consultation. If you are looking for a Florida estate planning attorney in the Greater Orlando Area, we are here to help with all your Estate Planning and Asset Protection needs.