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Estate planning fundamentals: Preserving wealth not just for the rich

Spotlight on Finance

— You should take the time to find a local financial advisor and schedule an appointment to create a will and discuss your estate planning. This will allow you to put into writing your intentions on the handling of your property and valuables at death. You can change your will at any time. For parents, one of the most important parts of this process is designating guardians for your children. Determining who cares for your children upon your death is not something any parent wants to leave as an open question. You also should choose an executor and explain how you want your property distributed. Choosing an executor is another important decision you should discuss thoroughly with your advisor. This way you can avoid some of the other methods of property and asset transfer that may be against your intentions.

Here are some additional things to consider when estate planning:

  • Probate. This process deals with proving in court the validity of the deceased person’s will, identifying his or her property, having it appraised, paying off debts and taxes and then finally distributing the remaining property as the will directs.
  • Property transfer taxes for the transfer of title on property owned.
  • The estate tax, which is a tax on the transfer of property to others. Depending on the value of the property and assets at the time of death, estate taxes may need to be paid before distribution of the estate can take place.
  • The gift tax, which is a tax on the transfer of property by one individual to another while receiving nothing or less than full value in return during a person’s life. This tax prevents the avoidance of an estate tax should a person want to give away his/her estate.
  • The inheritance tax, which is similar to the estate tax, but is imposed by certain states.
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