If you have a family, it is important to put together an estate plan that has protections in place for family members in the event something happens to you. The right plan protects assets, saves on taxes and looks out for your children.
Every situation is different, so there is not a one-size-fits-all estate plan. However, there are some general tips that most people should follow.
Estate planning tips
According to U.S. News and World Report, one of the most important parts of an estate plan is a will. In it, you outline how you want your assets distributed. Without a will, potential beneficiaries could spend time and money in a contentious court battle. You should review this document regularly and update it when necessary.
If you have an IRA or 401k, you should think about tax consequences. You can convert these accounts gradually to a Roth IRA, which has tax-free contributions. Make sure you have named beneficiaries on accounts such as life insurance policies and retirement accounts.
If you have a large estate, you may want to consider opening a trust. There are different types of trusts, so you should research them before deciding on which one is the most beneficial for your goals.
If you have young children, another important aspect of estate planning is naming a guardian for your offspring in the event both you and your spouse die. FindLaw discusses some factors you should consider when naming a guardian. Some things to consider about potential guardians:
- Shared values and goals
- Matching attributes
- Financial stability
It is a good idea to name a backup guardian in the event your original choice is unable to fill the role if the time comes.