Monday, May 7, 2012, AM | 1 Comment
If you have not made out your will yet, it may be a good time to do so now. Better yet think about making your estate planning which is considered by personal finance experts to be much better than a will.
If you don’t have a will, your state has one for you – and it is probably not what you would have chosen. Make sure that your loved ones and assets are protected by taking the time to prepare a will.
If you already have a will in place, it is a good idea to review it periodically to ensure that it is up-to-date with your financial and family information.
Confirm Your Beneficiary
Any funds left in your retirement plan at your death will pass to the beneficiaries named in the plan document. Even if you have a will that is up-to-date, the retirement plan money will generally pass to the people named on the plan document.
From time to time, you should review your beneficiary information to verify it corresponds with your current situation.
Expect The Best, Prepare For The Worst
You can never fully prepare for a disaster, but there is one simple thing you can do to make things easier financially if disaster does strike.
Making a home inventory complete with serial numbers and pictures of the most valuable items will make filing an insurance claim much easier and more complete in the event of a catastrophic fire or natural disaster.
Make sure to keep the list somewhere safe and preferably not in your home. Take it to work, a safety deposit box, or give it to a friend or family member for safekeeping and easy recovery in an emergency.
The Last Tax Shelter
If you have the luxury of picking and choosing which of your investments to sell and which to hold and let pass to your heirs, let the investments with the biggest gains to be realized pass to your heirs.
When your heirs inherit the investment, their basis will be equal to the fair market value and the gain which now exists will not be taxed as income.
For example, suppose you are looking to convert an investment into cash and have two from which to choose. One investment has a value of $10,000 and a basis of $8,000 while the other investment has a value of $10,000 and a basis of $100.
You should sell the first one because you will end up netting more cash after tax. If you let the second investment pass through your estate, your heirs will receive the investment with a basis of $10,000 and they won’t have to pay tax on the gain.
Letting high gain investments pass through your estate to avoid paying tax is an effective tax shelter.
In a Nutshell
Be aware of the tax issues regarding estate planning.
- May 7, 2012: Tax Issues With Estate Planning – Best Retirement Information