Estate planning is a responsible step, especially for those with a significant estate that will be divided among multiple heirs upon the death of the estate holder. If you die without a will or any form of an estate plan, the laws of the state you reside in will determine how your estate will be distributed. But how difficult is it to create a comprehensive estate plan and where should you start?
Your will is probably the first and most basic part of estate planning. Your will is the way to describe your wishes about how your estate is to be distributed upon your death. While there are some limitations to what can be done in a will, but for the most part you can make any bequests you want.
One thing some people worry about when doing estate planning is estate taxes that will be levied against the bequest. The amount of estate taxes can take a significant chunk out of the estate, but there are some ways to avoid estate taxes. One way is to create a living trust, in which the estate is basically transferred to the heir before the death of the original estate holder, but the estate holder may continue to retain physical ownership of the property for a period of time.
There are several kinds of trusts that can be established to meet whatever needs you have. For example, money can be put into a fund until a child reaches a certain age. It may be 18, 25 or even older. Or it could be that the trust is set up for future generations with the interceding generations serving as caretakers. Theoretically, this could go through as many generations as the estate holder wanted to signify.
With trusts, the stipulations can be as stringent or as lenient as the estate holder wants. The person who’ll oversee the trust is sometimes given great leeway with regard to how money can be invested or handled. In other cases, the trust is strictly governed until the trustee reaches the age to obtain the trust.
