Estate Planning Lesson
Estate Planning is a vital part of your personal financial plan. The most important thing is you don't want to leave your heirs with unnecessary taxes and expenses. I learned about this type of planning by reading because I felt so bad after watching some of my family members who didn't do any planning.
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There are many things you can do to ensure that your family inherits the things you want them to inherit. There are things such as wills, trusts and corporations which all help with estate planning.
Wills:Why create a will? If you don’t create a will your assets will be distributed by the state which may cause some family members to get assets they don’t deserve. When you create a will you decide who gets your assets and you can set aside assets for love ones that are too young to handle them at the time of your death. If by chance you are not married but have a partner that you would like to inherit your assets they won’t get them if you don’t have a will stating your wishes. If you are divorced and your ex-spouse is living with someone else having a will allows you to decide if they get any of your assets. You can make sure you don’t pay unnecessary inheritance tax. If you have children you can make arrangements for the care of your children even if both parents die before they are able to take care of themselves. If you don’t have a will the state determines what happens with your assets. If you are married and have children in most states your assets will be divided among your spouse and children. If you are not married and have no children your assets will be distributed to your next of kin. If the state can’t find your next of kin your assets will be given to the state. Amazon Has Some Great Tools For Creating Your Own Will
Amazon has some do it yourself forms that you can complete and file to let your family know your wishes at your death. Contrary to what many believe you don't have to have a lawyer complete the forms for them to be legal. Here you can purchase reasonably priced forms and books to help you prepare your will.
Trusts & Estate Planning: What is a trust? A trust is an agreement that allows one person to manage money or other assets on behalf of another person for estate planning purposes. You are able to control your assets while you are alive but upon your death the assets are automatically transferred to your heirs without probate.Visit Our Trust Lesson For More Detail Benefits You can make sure assets are allocated as you wish and the people you want to be taken care of are even if they are not old enough to take care of themselves. You will postpone or avoid unnecessary estate taxes. It’s an estate planning tool that allows the trustee to administer estate property. Creating a Trust In order to create a legal trust there must be a trustee, trustor, beneficiary, trust property and a trust agreement. The person creating the trust is called the trustor. . The trustee is the individual, institution or organization that holds legal title to the trust property and is responsible for managing and administering those assets. The beneficiary is the person who will receive the assets. The property may be any asset, such as stocks, real estate, cash, a business or insurance. The trust agreement is a contract that formally expresses the understanding between the trustor and trustee. It generally contains instructions to describe how the trust property is to be held and invested, how the benefits (such as income or principal) are to be used, and the duration of the agreement. Types of Trust Trusts may be classified by their purposes, by the ways in which they are created, by the nature of the property they contain, and by their duration. One common way to describe trusts is by their relationship to the trustor's life. In this regard, trusts are generally classified as either living trusts, or testamentary trusts. Living trusts are created during the lifetime of the trustor. Property held in a living trust is not normally subject to probate. Testamentary trusts are created as part of a will and must conform to the statutory requirements that govern wills. This type of trust becomes effective upon the death of the person making the will (the "decedent") and is commonly used to conserve or transfer wealth. The will provides that part or all of the decedent's estate will go to a trustee who is charged with administering the trust property and making distributions to designated beneficiaries according to the provisions of the trust. Living trusts can be "revocable" or "irrevocable." The trustor may change the terms or cancel a revocable living trust. Upon revocation, the trustor resumes ownership of the trust property. Revocable living trust is used in estate planning when the trustor does not want to lose permanent control of the trust property, is unsure of how well the trust will be administered, or is uncertain of the proper duration for the trust. An irrevocable living trust may not be altered or terminated by the trustor once the agreement is signed. An irrevocable trust helps with your estate planning because you decide how your assets will be distributed while you are alive. The down side is once you make the decision you can’t change your mind. Findlegalforms.com Has Forms To Create A Trust
Here you can find the forms needed to create whatever type of trust you are interested in creating. The forms are a very cost effective way to create your trust. However, I recommend that you at least have an attorney review the documents to make sure you have completed them properly and won't have a problem in the future.
Corporations & Estate Planning: What is a corporation? A corporation is and entity that is created to conduct business. One of the benefits is it’s separate from the humans that manage the entity. Corporations must have at least one owner known as a shareholder but can have an unlimited number of shareholders. Ownership in the corporation is determined in units or shares. The more shares you own the greater your percentage ownership in the corporation. The corporation comes into existence when the articles of incorporation are filed with the state of incorporation. Shareholders of the corporation elect a board of directors to make the decisions about the operation of the company. The board of directors appoint officers to execute their instruction. If you are the only shareholder in your company you can fulfill all of the offices which helps with your estate planning. Benefits of a corporation Managers are totally protected from personal liability as long as they conduct business legally and ethically. In addition to limited liability protection, corporations offer two tax advantages. First, under the present tax code, a corporation may claim a one hundred percent deduction for health insurance the corporation purchases for the shareholders' benefit. Second, a corporation may deduct the cost of life insurance, up to a $50,000 policy, the corporation purchases for the shareholders. The advantage for estate planning purposes is you can issue non-voting stock to your heirs while you are alive so theoretically they own the company but because you own the voting stock while you are alive you still maintain control of the company. You can distribute the voting stock to them in your will so they get control of the company when you die. Disadvantages of corporations Doing business through a corporation carries several tax disadvantages. Because a corporation has its own existence, it pays taxes on its own income. However, if a corporation has losses, only the corporation, and not the shareholders, can claim those losses as a tax deduction. If you are conducting your business through a corporation, you will be unable to deduct business losses until the corporation makes a profit, even if you have personal income from other sources. The other disadvantage is double taxation. For instance if you make a profit the corporation has to pay taxes on the profit then as a shareholder you pay taxes on your personal taxes.
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