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The chances are you have put in so much effort accumulating assets ever since you started working. Thus, your efforts shouldn't go in vain in the event of incapacitation or death. For this reason, you should consider estate planning to put your assets in good hands. However, it is vital to approach this process carefully to avoid making terrible mistakes. Here are three factors to consider during an estate planning process.
1. A Will
If you don't have a will, the authorities will distribute your funds and assets upon your death. This can result in battles and discontent that can make the process stressful and longer. Therefore, it is essential to write a will with professional help, such as a financial expert and an attorney.
If you have kids, you should name a reliable guardian in the will because you want them to be under the best care. Moreover, you should include charitable donations in your will if you wish to leave some money or property to some organizations. Include the inheritance information of small items, such as jewelry, artwork, and decorative possessions.
Additionally, you should write a living will stating your wishes for medical care if you become incapacitated. This includes the medical treatments that should or should not be performed, pain management solutions, and other medical decisions.
You should review your will regularly, updating details and making other necessary adjustments. Your attorney and financial advisor should have a copy of the updated wills. With their help, you should ensure no discrepancies between your wills since inconsistencies might nullify your will.
2. Taxes
Taxes on inheritance properties can reduce the gains of your designated beneficiaries. Thus, you should work closely with an estate tax planning professional to minimize the taxes. For instance, you can use a trust where a third party will hold the assets and manage them on behalf of your beneficiaries. Hence, they won't have to go through a costly probate process.
3. Liquidity
It is more practical to leave your family inheritances that can quickly be converted to cash without affecting their values significantly. Therefore, you should convert some of your assets and life insurance policy to money early enough. The estate planning attorney will help you make the right calls to protect your kids' financial future.
Estate planning can keep your loved ones in a stable living state after incapacitating or passing on. You should consider the strategic factors discussed above to make the process more manageable. Choose a seasoned attorney for estate planning advice.