Estate planning can be a complicated task, but the good news is that most people can set up a basic estate plan with just a little bit of help from their attorneys and tax or financial advisors. The point of an estate plan is to make sure you have the basic protections in place, like your will, a health care proxy and your durable power of attorney.
The purpose of an estate plan is to protect you and to help maximize what you leave behind to heirs or beneficiaries. Your estate plan can help you minimize taxes and help others understand your wishes once you pass away.
What's the estate plan's role in taxation?
One of the most important factors that your estate plan accounts for is taxation. There are a few kinds of taxation that could occur including estate, inheritance and gift taxes. Estate and gift taxes have limits on the amount of exemptions you can have, which helps you transfer assets to others without accruing taxes. Any taxes you do face are placed on the value of your taxable estate, so your attorney and financial advisor will take steps to reduce the value of your taxable estate through trusts, gifts and other techniques.
When you go to see your attorney, make sure you bring your financial documents and know who you'd like to appoint as your estate's administrator, your health-care proxy and beneficiaries. The more information you can provide, the easier it will be to set up a functioning estate plan that protects you and the people you'll leave behind.