Estate planning is important for people of all ages and levels of wealth

June 05, 2013 (Press-News.org) Estate planning is important for people of all ages and levels of wealth

Article provided by Coffman, Defries & Nothern, P.A.
Visit us at http://www.cdnlaw.com

Estates valued in excess of $5.25 million -- $10.5 million for married couples -- are subject to federal estate taxation. Although most people will never realize that much wealth in their lifetimes, it is still vitally important to consider estate planning, regard-less of your age or financial situation.

Set up an estate plan

An estate plan allows you to designate what goes to whom and in what amount after your death. It also helps to preserve family wealth, integrate tax planning, and simplifies the probate and trust administration process.

Minimum estate planning should include a will, health care directive and power of attorney for financial matters. If you have minor children, you can designate a guardian and determine when your child will receive his or her inheritance. Specially crafted trusts can also provide for your adult children if they have special needs or struggle with addiction or financial responsibilities.

Regularly review your plan

Once you have set up your estate plan, do not set it aside and forget about it. Circumstances change, families grow, people divorce and remarry and new laws are introduced every few years. All these factors may affect how you want your estate plan to be structured. The recent tax law changes meant major changes for a number of people and future tax laws may affect you the same way.

Check your beneficiary designations

Not only must you regularly review your existing estate planning documents, you should also check the beneficiary designations on your insurance policies and retirement accounts. Beneficiary designation forms usually trump what you have written in your will or trust, which may not be the wishes reflected in your documents.

For example, when you started your first real job, you may have begun contributing to a 401(k). At the time you set up that account, you probably designated a beneficiary and a contingent beneficiary. If you were married and subsequently divorced, failure to update the designation may allow your ex-spouse to receive the proceeds. Similarly, if a named beneficiary predeceases you, unintended results may occur without an update to your beneficiary designation.

Consult a lawyer

No matter what your level of income, it is important to evaluate your estate planning needs with an experienced lawyer. An attorney knowledgeable about estates, trust administration and tax planning can help you create a plan that serves your particular needs.