What to know about planning an estate and why it’s important

You’ve spent your life building equity in your home, making your car payments and creating a profitable stock portfolio. But do you have a plan detailing what happens to all those assets after you die? Proper estate planning is important for anyone with all kinds of assets. It can help you determine exactly who you want your properties distributed to, and it puts the management of that disbursement into the hands of someone you trust.

In the end, planning an estate gives you control over your properties even after you’re gone. It can also prevent conflict between your beneficiaries.

Continue reading to learn more about estate plans and why you should start putting one together.

What’s an estate plan?

An estate plan details how a person’s assets should be distributed or managed in the event of their death, or if they can no longer manage their estate themselves. Assets can include a house, cars, stocks, pensions and even a person’s debt.

Planning an estate for after you’re gone can help you avoid paying estate taxes while at the same time giving you control over what happens to your assets.

Why’s it important?

Many people don’t spend enough time thinking about the benefits of estate planning, focusing too much on managing their assets in the present. Proper estate planning helps you:

• Prevent conflict: Lots of people don’t realize that their estate could be the source of intense struggle between their children after they die. This can lead to years of turmoil and permanently damage relationships. Designing an estate plan that equitably divides your estate between each of your children can help prevent conflict and ensure that each of your children feels valued and respected by you after you’re gone.
• Protect your assets: When you die, your estate could be the target of creditors, seizure and other forms of loss. Proper estate planning helps you avoid estate taxes and protect your assets (and your beneficiaries when they eventually gain control of them) from lawsuits by putting your estate in someone else’s name after you die.
• Helps you maintain control: When you write an estate plan, you get to decide who receives which assets and, maybe more importantly, who’s in control of them. By selecting an individual you trust to handle your assets, you can rest easy knowing that your intentions will be carried out the way you intend.

What is an estate trust and what are the different types?

An estate trust is one of the main vehicles for transferring ownership of your assets to one or several beneficiaries. The main individuals involved are the grantor, beneficiary and trustee. The grantor is the one who creates the trust and transfers property into it. The beneficiary is the one who benefits from the trust. The trustee is the one responsible for administering the trust. These are some of the common types of trusts in estate planning:

• Living trust: Living trusts are created by individuals while they’re still alive. They transfer assets to a trustee, but typically still have the power to change the terms of the trust. Changes are no longer permitted once the grantor has died. One of the main benefits of living trusts is that it gives beneficiaries access to the funds right away.
• Testamentary trust: The main difference between living trusts and testamentary trusts is that the latter are created in line with instructions outlined in an individual’s will after they have died. They generally provide the same estate planning benefits as living trusts, but beneficiaries have to wait to gain access to the funds until after the grantor has passed.
• Charitable trust: Putting your money in a charitable trust commits a portion of your estate to a cause of your choosing. Donating your money to a charitable trust can also bring financial benefits while you’re still alive. You might be able to deduct your charitable trust funds from your taxes, and they won’t accrue capital gains tax.
• Special needs trust: Parents that have children with special needs should consider forming a special needs trust. This ensures that their child will still have access to the financial support they need without running the risk of losing government benefits.

Team up with Ameritas for a happy life

Don’t put off preparing for the future. Planning your estate now means you can relax knowing your loved ones are well cared for after you’re no longer here.

Ameritas is in the business of fulfilling life. Bringing you valuable information to help you plan well and enjoy life is part of what we do.