All adults need to ensure they have an estate plan in place that provides specific instructions for their loved ones. There are several components of estate plans to think about, some of which have to do with getting assets to their beneficiaries.
The creator of the estate plan needs to think carefully about who they want to receive what assets. This is the starting point for deciding how to make those wishes a reality. Understanding the options is critical at this point.
1. Gifting
One option that some individuals choose to use is strategic gifting. Individuals can give up to $18,000 per recipient in 2024. That amount doubles for couples. Once that annual amount is reached, any gifts are taxable. Strategic gifting can reduce the value of the estate to help control estate taxes.
2. Wills
Some assets, particularly smaller assets, might be passed down in the will. The will is also where the person can name who will handle the estate when the creator passes away. Typically, wills will go through the probate process, which makes the terms public record.
3. Trusts
A trust is an estate planning tool that holds assets until the creator dies. These can be revocable, which means they can be changed, or irrevocable, which means they can’t be changed. Trusts don’t have to go through the probate process, so they’re more private than wills. Some trusts have other benefits, so it’s critical for anyone estate planning to evaluate ones that might be useful.
Throughout the estate planning process, creators need to ensure their decisions are legally enforceable. Working with someone familiar with estate planning may be beneficial for these individuals.