Nearly half of Americans do not have a will, and even less than that have an estate plan. It is not hard to see why, since nobody wants to think about what will happen when they die. However, it is important to plan for your family’s financial future. Almost everyone can benefit from having a will, but if you are not sure if you need an estate plan, here are some things to consider:
If you have a child, it is important to decide what will happen to them in the event that you and your spouse die. In a will, you can name a guardian to take care of your child, but you should also state what assets the child might inherit and who is to take care of those assets until the child is old enough to gain access to them.
If you need something more extensive than a will, a trust might be the best option. A trust allows another person to hold assets on behalf of the person receiving them, and it can minimize estate taxes.
2. Size of the Estate and State of Residence
The federal estate tax is imposed on estates that are valued over $11.2 million per spouse. So, if one spouse dies first, the remaining spouse can have an estate that is valued under $22.4 million before the federal estate tax is imposed. In the state of Illinois, a state estate tax is also imposed on estates valued over $4 million. If your estate is valued over $4 million, you will have to file an estate tax return, and you may or may not actually owe taxes on it.
3. “Stretching” Your Assets
It’s important to note where your retirement investments are located, meaning what type of accounts they are held in and what the beneficiary benefits are. For example, retirement funds from IRAs are able to be “stretched,” allowing them to last for the lifetime of the beneficiaries. If you are leaving money to someone who is significantly younger than you, this could allow for tax-deferred or tax-free growth to continue.
4. Privacy Concerns
An estate plan can also minimize the probate process, including its expenses, delays, and loss of privacy. The probate process is the legal term for the way an estate is distributed to beneficiaries. Records from probate court are available to the public and can be accessed for use to challenge your will. Probate fees can also be expensive, and they can take up to five percent of the value of the estate. Probate typically takes around a year to complete, but with planning, it can usually be avoided.
If a person wants to incorporate charitable donations into their will, charities can be named as beneficiaries. Outlining charitable donations in your estate can have benefits, including:
- Reducing or getting rid of capital gains tax on assets that have appreciated
- Claiming tax deductions on donations
- Reducing the amount of estate taxes taken
- Giving to your chosen charities
If you own a business, an estate plan is a way to guarantee that the business is dealt with the way you want. If you want to keep the business in your family, you can make it easier to pass business assets to other family members by creating a family limited partnership or a family limited liability company.
7. Life Stage
Though any age is the right age to start planning for your future, your needs change throughout your life. As you grow older, your finances become more complex, and your assets and needs will change. Your estate plan should meet your current needs and anticipate your future needs.
8. Special Circumstances
Usually, the two most common special circumstances that people have when building an estate are blended families and concerns about disabilities. Though these two circumstances can make estate planning more difficult, an experienced attorney can help you make sure you have planned for your needs.
Contact a Tinley Park Estate Planning Attorney
No time is too early to start planning for your future. With the help of an experienced Orland Park estate planning lawyer, you can have the peace of mind that comes with being well prepared for anything that might happen. Contact Anderson & Associates, P.C. to learn how we can help you create an effective estate plan. Call 708-226-9904 to schedule a free consultation.