The ideal estate plan is going to vary depending on the circumstances. One of the primary considerations will be the extent of the assets that you have to pass on to your loved ones.
If your resources are relatively modest you are going to want to engage in traditional estate planning. This is going to involve preparing for the possibility of incapacity while you arrange for the future distribution of your financial assets to your heirs.
To account for the possibility of incapacity you can execute legally binding documents called durable powers of attorney. With these instruments you empower people of your choosing to make decisions in your behalf should you become unable to make them for yourself.
Your incapacity plan would also include the execution of a living will. This document is used to state your preferences regarding the use of artificial life-support measures like feeding tubes and respirators.
When it comes to arranging for the transfer of your financial assets you could use a last will to accomplish this objective. However, it is not your only option. When you use a will, probate is a factor and your heirs will not receive their inheritances until the estate has been probated.
Because of this many people will employ probate avoidance strategies. A very effective probate avoidance tool is the revocable living trust.
Legacy Wealth Planning
A legacy wealth plan can be more complex than a traditional estate plan. Legacy wealth planning often includes the implementation of estate tax efficiency strategies.
If your assets exceed $5.25 million in value the estate tax is a factor. It carries a 40 percent maximum rate, and it would potentially be levied on anything that you pass along that exceeds this $5.25 million exclusion.
Asset protection can also be a part of a legacy wealth plan. Litigious types often target people with deep pockets, and individuals in some lines of work are particularly prone to lawsuits. This would include many physicians, and people who own rental properties.
Philanthropy can be a part of your legacy wealth plan as well. You may be in a position to provide for your family while simultaneously making the world a better place through acts of charitable giving.
You can give to charities in a number of different ways. One way to make sure that you are remembered for many years to come would be to create a private family foundation that bears your name. The foundation can endow grants to worthy causes, and this can be personally rewarding for your entire family.
In addition to the personal rewards, there can also be tax advantages realized when you make charitable giving a part of your legacy wealth plan.