While estate planning is sometimes thought of as something important for wealthy people, it doesn’t take wealth in order to do it. Estate planning for someone of a more modest net worth may be a bit different than for somebody who is wealthy, but there are some principles that apply regardless of a person’s financial station in life. Typically, when a person consults with an estate planning attorney in Scottsdale AZ, the most important thing is making sure the right people get the right inheritance with the lowest tax obligation possible.
A good way to ensure that a beneficiary gets what is desired is to delineate this in the will. It’s also important to update this will when changes occur over the years. Whether it’s changing the beneficiary status of an ex-spouse or including grandchildren into the will, keeping it up-to-date is a great way to ensure that someone’s desires for their beneficiaries are followed to the letter.
The next issue is taxes, and this can be a difficult situation. There are some estates that simply don’t rise to the financial level where heavy taxation is going to be an issue. However, if a person is concerned that their beneficiaries may have to pay taxes or other administrative fees, there are some ways to mitigate this situation.
One way is to ensure that any monetary inheritance is free of tax burdens is to specify that the beneficiary get the financial inheritance in a way other than cash. For example, IRA accounts and life insurance beneficiaries can enjoy tax-free status when structured properly.
Another option that an estate planning attorney in Scottsdale AZ might recommend is getting a head start on distributing inheritances to the specified beneficiaries before actually passing away. In these instances, a person is able to gift up to $13,000 per beneficiary per year without there being any tax burden to the individual distributing the inheritance or the individual receiving the money.
There are many other situations that can help lighten the tax burden of your beneficiaries after your death. If this is important to you, it’s important to speak with an estate planning attorney as early as possible. These attorneys can help you create or legally amend an existing will, and they can help your beneficiaries to avoid tax burdens and unforeseen difficulties.