Estate planning entails listing your goals and objectives, organizing your financial affairs, planning the management of your assets and health care if you become incapacitated and after your death, distribution of your assets and communicating your intentions. You’re establishing a plan for the final distribution of your assets and the execution of your final wishes.
Forbes’s article, “Estate Planning: What You Need To Know,” says that this preparation means asking yourself questions that can make you uncomfortable, like the following:
- Will my family have the financial resources to thrive, if I were to pass away unexpectedly?
- If I’m unable to care for myself, who should make financial and medical decisions on my behalf?
- If I’m terminally ill or seriously injured, what life-sustaining efforts would I want to receive (if any)?
- What assets do I want to leave for my spouse, children, favorite charity and others?
- How do I protect my assets from creditors or ex-spouses?
- How do I lessen the tax exposure of my estate?
You need to answer these types of questions while you’re still here, so you don’t risk them being made for you by others.
When creating your estate plan, first get your financial life in order. Make a list of all your assets. Then keep it in a location that can be easily accessed. This will give you a pretty good sense of your net worth. You can then create a plan that will ensure your estate will be managed according to your wishes.
You can give away some of your wealth over your lifetime, but the annual gift tax exemption is the amount you can gift, tax-free, to a person in any one year. There is no limit to the number of gifts you can give. You can give one or multiple gifts as long as none of them exceeds the exemption. The exemption is $15,000 for 2019. In addition, there’s a lifetime gift tax exemption, which is the total amount you can gift over your lifetime without incurring a tax. In 2019, the exemption is $11.4 million. The total amount you gift over your lifetime gift tax exemption will correspondingly decrease your estate tax exemption, when you pass away.
You should also prepare yourself and your loved ones for the inevitable. Don’t wait for a scare or crisis to start this process. It’s critical that everyone understand your plan ahead of time.
Estate planning is important for everyone, regardless age or wealth. If you want to keep control of your wishes, talk to an experienced estate planning attorney and create a sound estate plan.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Forbes (August 6, 2019) “Estate Planning: What You Need To Know”