Your estate plan provides valuable information about how you want your assets distributed after your death. It also includes instructions about what you want to happen if you’re incapacitated and unable to make decisions on your own.
As you’re creating the terms of the estate plan, you have to think carefully about how each point will help you to meet your goals for your loved ones. Consider these points as you’re creating the estate plan:
Some assets shouldn’t be included
It’s important to make sure that all of your assets are distributed when you pass away. Each asset that you have should only be covered in one place. If you put something in a trust, it shouldn’t be listed in the will. You also have to think about payable on death designations that apply to many financial accounts. If there’s a payable on death instruction on a checking, savings, investment or retirement account, those shouldn’t be included in a will or trust, either.
Certain taxes may apply
As you’re making your plans, remember that there are taxes that have to be paid on some assets and inheritances. Pennsylvania has an inheritance tax, which is based on the value of the estate and the relationship between the decedent and the beneficiary. This can eat away up to 15% of the total value of the estate. Federal taxes also apply in some cases. There are, however, mitigation strategies that you can use that will help your heirs avoid unnecessary taxes — but you need to plan early.
Anyone who needs to create or update an estate plan should ensure they understand how to do this so their wishes are followed. Working with someone who’s familiar with estate planning makes this a bit easier and can give you the peace of mind you deserve.