Estate Planning Strategies that Help You and Your Family

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Estate Planning Strategies that Help You and Your Family


The estate planning process is confusing. It involves estate tax estimations, beneficiary designations, and lots of legal documents. This is part of why so many people decide to avoid making an estate plan altogether. But if you avoid taking the time to outline how you want your possessions distributed and what assets you’d prefer sold, then settling your estate becomes difficult and time-consuming for your family.

There are ways to make the process easier. It’s all about properly preparing your accounts and assets and having the right people help you. In this article, we’ll talk about the five aspects of a detailed estate plan that will make settling your estate an easy task for your family.


Have a Will

Writing a last will and testament is the first step in the estate planning process. This document clearly outlines how you’d like your belongings divided among your family and children. When you’re gone, your estate planning attorney or designated executor will use your will as the hard and fast rules of managing your estate, which can greatly speed up the process.

Despite the importance of this document, 33% of people say they don’t have a will. This makes inheritance and succession much trickier for their families because they have to abide by state and federal laws instead of your final wishes. To do things this way, the courts have to get involved.

Without a will, your possessions will be divided in probate court. This means not only will a judge decide who gets what but also that your family will have to attend a court date and wait for the legal system to pass down a judgment before they can do anything with your property and assets. 

A will is the most basic form of both estate and succession planning. It not only ensures that your final wishes will be carried out but also prevents settling your estate from turning into a years-long ordeal.


Choose an Executor and Beneficiaries

Having an executor for your will is important, so it’s important to choose wisely. Some people keep their attorney as their executor and others have a family member or friend they prefer to trust in the role. This person will be in charge of managing and distributing every aspect of your estate, from death benefits to your stamp collection, so it needs to be someone who understands the legal structure of estates and has the time to do things right.

Another important decision in estate planning is your beneficiaries. These are the people who will collect money from your life insurance policies, retirement accounts, and living trusts. Most policies require you to list at least one beneficiary and designate the percentage of the total benefit you want them to receive. 

Be sure you tell your beneficiaries which accounts they’re listed on and how much to expect when it comes time to collect the benefits. Most companies require beneficiaries to send a death certificate and initiate the claims process, so they need to know who to contact with what information. They should also keep in mind that most death benefits they receive are tax-free, but any interest earned on them will be subject to income tax laws.

Keep in mind that in community property states, married couples share assets equally. This means your spouse is legally entitled to half of everything in your estate. So any income from sales will go half to the spouse and the rest will be divided accordingly among your beneficiaries. 


Set Up a Trust

Establishing a trust fund as part of your wealth management strategy is a wise choice if your net worth exceeds $250,000. These accounts help you leave money to specific individuals and even allow for you to appoint stipulations for your loved ones to access the money. Plus, they often come with some estate tax exemptions.

There are many different types of trusts, but most financial advisors will steer you toward an irrevocable trust because it has the most tax benefits for your estate. With this type of trust, the money belongs to the account and is not part of your taxable estate. So depending on how you set it up, the beneficiaries could avoid paying state and federal estate taxes as well as any inheritance tax. 

You can fund your trusts a few different ways, such as with cash or through an irrevocable life insurance trust (ILIT). This is when you use money from life insurance policies to fund the account. Choosing how to establish and fund your trust takes careful precision and special knowledge, so be sure to speak with a tax professional or estate attorney before making any decisions. 


Convert Traditional Retirement Accounts

Converting some of your retirement accounts into post-tax formats is another way to make settling your estate easy on your family by creating some tax advantages. Traditional accounts like IRAs and 401(k)s are funded with pre-tax dollars, which means when the funds are disbursed to a beneficiary, they have to pay income tax on it. 

As your lawyer or accountant creates your financial plan, they might advise you to convert these pre-tax accounts into a Roth IRA or similar fund. That’s because a Roth is funded with after-tax money, so distributions aren’t subject to income tax. There are other accounts that offer specialized tax exemptions, as well, so discuss your options with your estate tax planning professional. 

The key to establishing a smart retirement plan for your estate is to understand both state and federal tax laws. These will give you a better idea of the tax rates your estate will be subject to and which accounts can help you best avoid a significant tax liability for your family when your wealth is passed to them.


Plan for an Estate Auction

Aside from leaving clear instructions and setting up tax-advantaged accounts, you also need to think about your physical assets and property. How will your family approach selling your home or land? They could go through the traditional market, but that takes time, energy, and preparation, plus it depends on having a favorable market. 

Instead of leaving your loved ones to deal with everything inside your home and the house itself, plan for an estate auction. You can use an auction to sell all of your assets at once on a designated date. This reduces the burden on your family to manage the entire sales process, find buyers and negotiate a good price. 

Auction groups are an excellent resource if this is how you’d like to sell your estate. They provide a licensed real estate agent to help you assess the value of your home and list it for sale. Then they’ll manage the entire auction process so all your family has to do is wait for the sale to close. It saves them time and energy they can spend on carrying out the rest of your final wishes.

At Weeks Auction Group, we help families sell their loved one’s estate the easy way. To learn more about the process and how we can help, reach out to us today.