Inherited IRAs
Jennifer Thomas, CFP® answers a listener’s question on what to do with an inherited IRA.
Estate Planning Tool—Qualified Personal Residence Trust
A Qualified Personal Residence Trust can be used as part of your overall estate plan to transfer the family home to your children or grandchildren, without incurring federal estate tax. However, there are some tax considerations for your heirs if they choose to sell the property in the future. For more information on Qualified Personal Residence Trusts, read this C.P.A. Insight.
The Importance of Naming a Guardian for Your Minor Children
A guardian is someone who the parents choose to care for their minor children in the event they cannot. While this may prove to be a tough decision to make, once agreed upon, the guardian can be simply named in the parents’ Wills. For more information, such as the things to consider when choosing a guardian, read this Financial Strategy.
Living Wills and Healthcare Powers of Attorney
A living Will and a Healthcare Power of Attorney can be used to make your wishes known if you become incapacitated and can cannot make decisions regarding your medical care. You can make your wishes know in advance regarding resuscitation, and the administration of food and water. For more information on planning health care decisions in advance, read this Financial Strategy.
Updating Your Estate Plan: IRA Beneficiaries
Every few years, it is prudent to review your beneficiary designations for your retirement plans, as these assets are generally not included in your estate. Marriage, divorce or the addition of children are all events that could change whom you would want to receive your assets if you should pass away. For more information on how to designate beneficiaries, read this Financial Strategy.
Naming an Executor
Executors of a Will are required to administer an estate with the highest degree of trust and honesty. It can be a daunting task, depending on the complexity of the estate. For more information on some of the duties/requirements of an executor, read this Financial Strategy.
Basics of Gifting
Gifting is a way to reduce your estate by passing on property to others while you are still alive. Individuals are allowed to gift up to $13,000 in property to an individual per year. You may make as many $13,000 annual gifts as you wish to any number of individuals, without being required to file a gift tax return. For more information on the basics of gifting, read this Financial Strategy.
Life Insurance as an Estate Planning Tool
If your loved ones’ financial situation would be severely impacted if you were to die, chances are you need some life insurance. Life insurance can also be used to cover short-term expenses such as funeral arrangements, taxes and debts. For more information on using life insurance as part of your estate plan, read this Insurance Know-How.
Don’t Make Uncle Sam Your Beneficiary
A successful estate plan takes more than good intentions. If you do not have a Will in place, a nameless, faceless court will decide how your assets will be distributed. This is one of many pitfalls you could face if you do not revisit your estate plan, as your family situation or federal and state laws change. For more information on areas you should consult your estate planning attorney or tax adviser on, read this Financial Strategy.
Uncertainties Are Part of Estate Planning
Uncertainty overshadows the entire estate planning process including the changing tax laws and the value of your estate when you die. To combat uncertainties when developing an estate plan, you should realize that an estate plan is not a one-time endeavor. Rather, it is a plan that should be flexible to accommodate both lifestyle and law changes. For more on building flexibility into an estate plan, read this Financial Strategy.