An estate plan allows you to:
- Quickly settle issues related to your estate, minimizing expenses and legal fees
- Provide financial support for your friends or family members, such as a relative with special needs
- Avoid possible disruption of your business during the time of transition
- Direct money to your favorite charity or religious organization
- Reduce taxes owed after your death
Elements of an estate plan
A plan generally comprises three elements:
- The last will and testament is a blueprint that directs who will receive your property upon your death and the specific circumstances in which they will receive it. Your will governs only property that flows through probate.
- The durable power of attorney (POA) authorizes someone, often called an agent, to handle your financial affairs if you were to become incapacitated.
- A trust is a formal arrangement allowing the trustee to hold assets. The trustee distributes assets to your beneficiaries at the time that you direct in the trust document.
Estate planning can be complex. It is important to keep the following in mind:
- Be sure that your beneficiary designations reflect your wishes. Contact your current and former employers, your investment advisor, and your life insurance agent for the required paperwork to make any changes, if necessary.
- Don’t make the mistake of assuming a change in your circumstances, like a remarriage, will make a prior designation null and void.
- Include both primary and contingent beneficiaries for your accounts.
- Relatives with special needs or disabilities rarely inherit directly. Receiving an inheritance outside of a special needs trust could mean the loss of valuable government benefits.
- A spouse who inherits a retirement account has several options for deferring income taxes until the money is needed. When your children inherit retirement accounts, they cannot defer taking distributions from the account until their own retirement.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Brian Bisdorf, CRPC ® is a financial advisor with Bisdorf Palmer, LLC at 201 American Concourse, Suite 310. Fort Worth, TX 76106. He offers securities and advisory services as a Registered Representative and Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 682.224.4001 or at [email protected]
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