They say that if you don’t have a plan for your money when you die, the government certainly does. To make sure your money is well-used (or spent), make your plans while you’re still alive.
If There’s a Will…
Wills are necessary and it’s easy to write one up by yourself. However, to make sure it holds once you’ve passed, consult an estate planning attorney. Laws differ from state to state so if you intend to live out your years in Utah, get advice from a local estate planning attorney.
Go on a Gift-giving Spree
If your estate is large enough, it will be taxed upon your death. If you want to keep as much of your money with your chosen beneficiaries, consider gifting to individuals while you’re still alive. The IRS will allow you to gift around $14,000.00 per individual tax-free. Doing this can lower the value of your estate enough to reduce the tax burden once you do pass on.
Keeping It Safe
If your beneficiaries are minors or you aren’t confident that they are capable of managing such funds, consider opening a trust account. Again, consult an attorney on how you wish the funds to be managed. You can designate an age or specific conditions for when the funds can be accessed. If you don’t have an heir or you don’t want to designate one, try creating a charitable trust. With a charitable trust, you retain control of your estate until your demise. Once you’ve passed, the trust funds go to the charitable organization of your choice.
Funds for Retirement
If you have a 401k then consider converting it into a Roth IRA. If the beneficiary of your 401k is not your spouse, then its value will be subjected to income tax. This rate can be higher than your current income tax if, in the future, your beneficiary is in a higher tax bracket. By converting to a Roth you take on the tax burden now to receive tax-free gains in the future.
No Matter What
Estate planning is necessary for everyone no matter how small or large your bank account is. Planning in advance will help ease some burden on your heirs’ shoulders once you’ve passed.