We’ve all seen the news stories of financial disasters for celebrities who died without a proper estate plan in place. Entertainment icons, such as Prince and Aretha Franklin, are some of the most recent examples, but even Abraham Lincoln died without a will in place.
Most of us work hard to make a good living and provide for a comfortable retirement, so it makes sense that we do end-of-life planning to protect our legacies and keep our families from a chaotic and potentially costly situation when we die.
Four ways to refine your estate plan
There are many steps you can take to control how your assets are distributed to future generations, including:
- Review beneficiaries: Many accounts bypass the costly and time-consuming probate process. These include life insurance policies, IRAs, 401(k)s and other accounts that are directly transferred to your beneficiary upon death. Review policies regularly to ensure they still meet your wishes and name contingent beneficiaries.
- Buy life insurance: If you are the primary earner for your family, having adequate life insurance will help protect your family in case of your untimely death. It’s also a way to provide tax-free income to future generations, or as a way to pay for estate taxes and provide liquidity to your estate for administering properties, such as family farms or other businesses.
- Avoid probate with trusts: Having a trust fund can improve an estate plan, especially for high-net-worth individuals. Revocable trusts can be changed at any time and can pass assets outside of probate. Irrevocable trusts cannot be changed but do provide added tax benefits in certain situations.
- Charitable giving: Many people want their legacy to include donations to their church, college, charity or other organizations. A charitable remainder annuity trust (CRAT) allows you to provide income to a spouse or other loved one and pass along the remainder to a charity.
Create an estate plan that meets your needs
Everyone’s financial situation is different, and estate plans aren’t only about money and property, they are also about protecting your family’s future by passing along as much of your fortune as possible. An estate planning attorney here in Pennsylvania can explain the complexities and help you find a plan to achieve your goals.