Estate planning is just as important as planning for retirement or securing the necessary insurance for your family upon your passing. Whether you want to create a simple will or establish a trust has a lot to do of course on the size of your estate. For instance, you’ll want to take into consideration the administrative abilities of any named trustees. If your spouse is a designated trustee but really doesn’t have the desire to handle the details of your estate upon your passing, it’s probably a good idea to appoint a co-trustee, such as a lawyer, who is better qualified to handle the management of your estate.
Executor. Not to be confused with the trustee, an executor or personal representative should be named to make certain the assets are distributed according to your desires and that the subsequent filings are made in order to settle the estate. There is quite a deal of paperwork generally involved for someone accepting the role of executor. So, it is a good idea you pick someone who is well-equipped to handle the responsibility.
Should you move, if you draw up a will in the state of your former residence, you’ll need to be sure that the will conforms to the laws where you’re currently living. That’s because wills are administered according to the laws in the state where you reside at the time of your death not in correlation to the laws of the state where they were originally created.
Trusts. You may also want to provide provisions for a trust in your estate planning. Trusts are useful financial vehicles that provide for family members during your lifetime as well as upon your passing. Definitively a trust is helpful in assisting your spouse and children manage the holdings left to them. Therefore, by creating a trust you are in essence directing the disbursement of your property. If the trust takes effect while you’re still alive, it’s called a living trust. One that becomes effective upon your death is a testamentary trust.
Typically, a testamentary trust is suitable for small estates or for those individuals who want a way to distribute their assets to their children upon their death. In some cases, the trust is used to divide an estate to reduce taxes. If you want your spouse to have full control of the assets upon your death then you’ll want to consider setting up a general power of appointment trust.
One type of trust that is particularly useful to couples who have children from other marriages is a qualified terminable trust. By establishing this trust, the surviving spouse, as in a general power of appointment trust, controls the assets but upon their death, the trust proceeds will go to the children. This way, income can be disbursed to, say, your children from a previous marriage without the worry that they’ll be disinherited upon the surviving spouse’s death.
If you opt for a life insurance trust, your designated heirs will receive the principal amount of the life insurance that is placed in a trust upon the death of your selected beneficiary. Should you wish to leave your money to a charity upon your death, then setting up a charitable remainder trust is a good option. With this type of trust, you can receive income during your lifetime and make provisions that the trust income be given to a chosen charity when you pass away.
If you haven’t yet drawn up a will or created a trust, it’s important you do so immediately. Talk to your spouse as to the disposition of the assets. Make sure both of you agree on this point. Also, list your assets, such as cash, savings accounts, stocks, bonds, IRAs, mutual funds, furnishing, autos, etc. List your assets as well as your debts or your mortgage and credit card balances. Whatever plans you make with respect to your estate, it’s good to have all your ducks in a row so to speak. While no one wants to consider their own death, estate planning now is the most considerate thing you can do for your family or those people or organizations you leave behind when you die.