Estate planning…something we should all do, but most of us put it off.
Do you think about your estate planning options?
60% of Americans have not gotten around to planning for the end of life. Though, the good news is that 81% of older folks, age 72 and up, have their estate planning documents in order.
While many people think they are too young to worry about planning for what happens to their estate after their gone, it is beneficial to plan early.
What will happen to your home, your stocks and bonds, your life insurance, and your personal belongings?
Estate planning is different for each individual. What are the most common estate planning strategies used in 2019? Let’s look at three plans that are often used and see which one fits for you.
The 3 Most Common Estate Planning Strategies
Having a plan for your estate and choosing your estate beneficiaries will give you peace of mind. Estate planning will ensure that your estate ends up where you want it after you are gone.
Revocable Living Trust
A Revocable Living Trust is a popular estate planning strategy. It is called a living trust because you create it and benefit from it during your lifetime.
If your circumstances take a different direction at some point, no worries. The trust is revocable as it can be changed if you change your mind about anything or anyone named in the trust.
The living trust contains instructions regarding what happens to your assets after you pass. It also preserves your privacy.
It differs from a will in that it avoids probate or the court handling of your estate. The court will not control your assets, so you will avoid expensive court costs and save time.
This strategy can help you eliminate or at least lessen estate taxes by using credit shelter provisions.
Last Will and Testament
In your last will and testament, you will name your estate beneficiary. It is a legally binding document that allows you, rather than the state, to decide what happens to your assets.
If you have minor children at the time of your death, your will also names who will receive guardianship of your children.
A will goes through probate and cannot be enforced until it is validated by the court.
In this scenario, you choose a beneficiary to receive proceeds from your trust, life insurance, or IRA, for example, upon your death.
Two types of beneficiaries exist:
- Primary – first in line to receive the asset for which they are named a beneficiary
- Secondary – will receive the assets if the primary beneficiary is deceased at the time of your death
You should periodically review your designated beneficiaries as you experience life changes such as getting married or having a child.
Which Strategy Will Work Best for Your Circumstances?
You have now learned the most popular estate planning strategies. Do your homework and get some advice on the best strategy for you and your circumstances.
Contact us with any questions you have or to schedule a consultation.