With each new year the amount of opportunities for success in your personal, financial and emotional growth increases exponentially. Why not make this year a successful one for all of your assets as well? Estate tax planning is one of the most important aspects of the financial planning process that is often ignored due to its complex nature and the simple fact that many individuals do not have the available time allotted in their schedules to create a comprehensive plan that works for them.
Before we get down to the details and strategies that come along with the estate tax planning process. We will break down the basics of what estate tax planning is and how it affects you.
Estate tax planning is essentially the process of formulating an all-inclusive strategy that looks into the future and while evaluating the present. After analyzing all assets, taxes and elements that will have an impact on your estate. A unique plan will be curated for an individual’s estate and all other assets that come along with it. This process is no stranger to the the distribution of designated assets to assigned parties. The reduction of taxes for the asset holder and the the minimization of net income and other monetary income streams that can increase overall taxes and have a negative impact on the estate tax planning process. Other elements included in the estate tax planning process are wills (for both the living and the deceased), trusts for life insurance, dynasties and other designated beneficiaries and other health insurance policies.
Strategies for Your Estate Tax Plan.
There are many different aspects that involved in the process of estate tax planning. Now that the foundation has been laid for the estate tax planning process It is time to come up with a few strategies to help you manage your estate and other assets you possess!
1. Create a Plan
For some individuals, this may not be an enjoyable experience. Be prepared to face tough decisions that will impact not only your life, but the lives of your heirs, successors and all others who will be impacted by the choices you will be making. It might be unpleasant at the moment to review financial statements, tax documentation and decide essentially decide “where to put your money”. But the decision to take charge of your estate tax planning will pay off in the long run.
2. Do Some Math. Time to Figure Out How Much You Are Worth
There are a variety of tax brackets that determine how much any employed individual should be paying in taxes per year. Review your tax statements for the past and present year, your net income and all assets held under your name to determine how much you are really worth and how much income you are bringing in every year. Once you have established your net income for the year it will be relatively simple to make a plan to decrease taxes for your estate or estates.
3. Establish a Plan to Decrease Your Yearly Taxes
This can be accomplished by making generous donations to your preferred charitable organizations such as the Red Cross, Unicef or even a religious affiliation of your preference. Other ways to reduce taxes is by “gifting” money to family members or close friends or other designated persons. Gifting money is absolutely guaranteed to reduce your estate taxes.
4. Now Give All of Your Assets Away!
Well, not really. In case you were unaware, any individual is able to gift a sum of fourteen thousand dollars per person to any person of their choosing and not suffer the consequences of a tax known as “The gift tax”. This is one of the best ways to easily distribute monetary funds to any individual of your choosing and reduce the risk of incurring other taxes in the future. “Gifting your estate away” is one of the most effective tax planning strategies you can incorporate into your plan.
5. Consider Hiring an Attorney
You might be asking yourself, “Do I really need an attorney to help me through the estate tax planning process”? The honest answer? Well, no you don’t. But, here are a few reasons why you should consider hiring one. You may be an excellent planner when it comes to finances and tax season in in your household, but sometimes we all need a little extra help.
One of the best ways to ensure that your estate and other assets are in more than capable hands, is through acquiring an experienced attorney. Employing an attorney who is well-versed in all aspects and development of estate tax planning can assist through the process creating an exhaustive finalized plan that will help you to manage and reach all of your goals. This attorney can act as helping hand who is there to guide you and answer any questions you may have along the way.
As you can see there are so many different parts of the estate planning process that come together to make a cohesive and effective strategy that will benefit you, your beneficiaries and all other persons in your line of succession. As a quick review, estate planning ties up all the loose ends from wills; trusts of all definitive categories, life and health insurance policies, the distribution of assets and reduction of yearly estate taxes. Estate tax planning is a necessary procedure that all individuals with significant assets must complete. Leaving unfinished business as an estate holder regardless if living or deceased is not an ideal way to ensure the lasting impact your estate can have for its potential heirs. It is a wise decision to create an all-inclusive estate tax plan. Remember the steps of the tax planning process: Review all assets and estates held under your name. Evaluate your financial status and net income. Gift sums of money to reduce taxes, and really take into consideration the idea of hiring a qualified attorney to help you throughout the estate tax planning process. Now that you are aware of all of the aspects that are part of the estate tax planning process, you are now ready to take on the new year with peace of mind and the knowledge to take control of your estate!