At some point you have to decide what you want done with your assets after you pass. It can make things much easier for your family during their time of grief if you have something set up. There are several estate plans that you can choose to utilize.
1. Wills
One of the most popular options is the will. It is one of the easiest processes to complete. You can do this yourself by filling out a one or two-page document, signing it, and having it witnessed. You can also go to an attorney and have them assist you. This is a good step if you have assets that need to be distributed among several heirs. An attorney can also help ensure that the document will hold up in probate court once you are gone. A will is essential for parents under 18, as it can serve as a way to say who should take custody of the children.
2. Revocable Living Trusts
If you want to forgo the hassle of probate for your loved one, you might consider having a revocable living trust as part of your estate plans. These allow you to pass property to your loved ones without going through the court. Any bank or financial institution can help you set up one.
Probably one of the best things about this plan is that it can be easily altered. You can add money to the account, take money out, and even name new beneficiaries. If you need to, you can also remove beneficiaries from your list. After you pass, this property is transferred quickly to the people you have chosen.
3. Totten Trusts
Any bank account can be turned into a Totten trust with only a signature on a few forms. What this does is designates the chosen beneficiaries that receive the contents within your account. They are simple to set up and are transferred quickly to your loved ones upon your death. In addition, if you have stocks and bonds, you can set these up to pass to whomever you choose in this manner.
4. AB Trust
A final trust for you to consider in your estate plans is the AB trust. With this, you leave your property to your spouse, and vice versa, for life. Should you pass away before your spouse, the property becomes theirs for the remainder of their life. Once they pass it moves directly to your children. While it can protect your estate from federal taxes, it can also be expensive to set up. This bypass, as it is better known, is only a good idea if you have over $3.5 million in assets, which is the limit before federal taxes become a concern.
In addition to setting up wills and trusts, you can also make charitable donations and gifts. Remember, you can only give as much as $13,000 to an individual or $26,000 to married couples per year before they have to pay gift taxes. It is a great way to reduce some of your assets and avoid death taxes upon your passing.
Whatever your estate plans are, you should start making decisions sooner rather than later. You don’t want to leave your loved ones without something determining how you want your assets distributed.