Estate Planning – Tax Implications, Beneficiary Designations, and Costs

When it comes to estate planning, there are several steps involved. Learn more about Tax implications, Beneficiary designations, and the costs of estate planning. After you’ve created an estate plan, you can revisit it periodically. Below are some tips to keep in mind. Also, consider how often you’ll need to update it. In general, you should update it after any significant life changes such as marriage, divorce, or the birth of a child.
Steps involved in estate planning

Estate planning involves the creation of legally binding documents and enforceable plans that will determine what your beneficiaries will receive upon your death. This way, your wishes will be carried out as you intended. The documents that will be created will detail exactly how your assets will be distributed to those you leave behind. Regardless of how much money you have or how small your estate is, estate planning is a necessary step to ensure that your loved ones will get what they deserve.
Tax implications of estate planning

While the Internal Revenue Code governs the major tax issues associated with estate planning, individual state laws may affect how your plan can be implemented. State laws may also affect how business entities can be set up and the rules that govern succession of property. Regardless, it is important to consider the tax implications of your plan. While retroactive tax laws are unlikely, it is best to review your estate plan to determine if any changes are necessary before 2021.
Beneficiary designations in estate planning

While beneficiary designations are useful, they are also an extremely blunt instrument, and many clients are confused by them. Let’s say Mary, a client with $2 million in assets, wishes to give $1 million to each of her children. She has an excellent attorney, but she’s not sure how to implement her wishes. She’s also unsure how her children will react if they are disinherited. In such a situation, it’s essential to explain your intentions to them and provide them with as much information as possible.
Cost of estate planning

The average cost of estate planning is between $1,500 and $3,000. However, depending on the complexity and quality of your plan, the costs can range from hundreds to thousands of dollars. Some people will pay a few hundred dollars to get a basic estate plan, while others may opt to hire an attorney for hundreds of hours. If you have millions of dollars to be distributed, you might want to invest in a high-end plan. In such a case, the cost will be higher than the average individual.
Mistakes to avoid in estate planning

There are a few common mistakes to avoid when it comes to estate planning. While every estate plan is different, they are all likely to have some weaknesses. A plan that has major weaknesses is far more likely to have mistakes, while one that isn’t as large is more likely to have a minor flaw. By following the steps outlined below, you can ensure that your estate plan is as foolproof as possible.