If you reside in Alabama and have many assets, it’s usually best to create an estate plan to help ensure your investments and property are divided per your wishes. Failing to do so can create problems in the future between your heirs and lead to a large estate tax bill. Planning for incapacitation is also advisable when you’re in this position.
Planning for incapacitation is essential
While you may be healthy now, you never know what will happen in the future. If you become ill or have an accident, it may leave you incapacitated. Ensuring you specify your end-of-life treatment and create directions for the orderly management of your property can be vital. Appointing a durable power of attorney is the best way to help ensure your financial and legal matters are handled per your wishes. This action should be part of the estate planning process as it allows an agent to handle your affairs.
Reducing the estate taxes you pay
Doing all you can to reduce the estate taxes you pay is also recommended when creating an estate plan. Scrutinizing each tax scenario can help ensure your estate pays as little as possible. Areas to examine include the following:
- Income taxes
- Generation-skipping taxes
- Estate taxes
- Gift taxes
Benefits of using a living trust
Knowing who to use to help distribute your assets after you die can be challenging. Using a living trust may be an option you’ll want to consider. Upon your death, your assets are transferred to each beneficiary via a successor trustee. This action helps reduce quarreling between heirs, which can occur if you have a wealthy estate. Using a living trust can also help avoid probate, leading to a faster distribution to your heirs. Doing so will also save money by avoiding probate expenses.
Taking the time to complete the estate planning process early can be best. It allows you to consider complex issues and develop a solid solution for each one.