Top 10 Estate Planning Tips

In 2011, the estate tax is scheduled to resurface, take the following recommended actions in protecting your assets!

Keep your will or trust updated. Most state laws will not validate a will made prior to a major life event such as the birth or adoption of a child, moving to a new state, divorce or marriage. Keep your beneficiary list, legal residence and marriage status up to date with your state.

Keep track of the beneficiaries to your wealth. Who are your listed beneficiaries? If you cannot answer this question, chances are they will not receive what you wish them to receive. Often times, you can change name of the person who will receive their benefits by filling out a simple forms

Maximize the liquidity of your assets. Liquidity is defined as the ability to quickly turn assets into cash. If you don’t allocate enough cash to pay taxes, funeral and other expenses your family will have to sell things that are illiquid at an inopportune time.

Maintain the right mix of investment risk. It is typically a bad idea to have all your eggs in one basket. Every 5-10 years it is a prudent move to reallocate your investment percentages to match your age. Over time you should move from a risk position to one of a safe and stable investment, such as Annuities.

Designate a prudent executor or trustee. These are the people who are called upon to collect assets, distribute those assets and pay off obligations. Your executor or trustee must enforce the provisions you have created in your trust. Choose a person or persons who have the knowledge, where-with-all and stamina in the face of pressure to fulfill these obligations.

Understand the ramifications of assets ownership with your partner. This ties in with item #1: If your joint net worth is in excess of $1 million, you may want to consider separate ownership of assets to protect your overall estate plan.

If your children are minors, consider naming a guardian for them and a separate guardian for the means you have left behind to support them. The guardian you have chosen for the kids may not be the best money manager you know. It is perfectly fine to name two separate guardians to handle two, very different, sets of responsibilities.

Explore your scenarios in regards to your partner and the estate. If your net worth is high enough, your estate may be subject to taxes. A simple plan can save some individuals hundreds of thousands of dollars in estate taxes.

Leave the assets to the people you care about. If your beneficiaries cannot handle the responsibility of their inheritance make sure to set up a management plan to guide them along the path you have laid before them.