Common sense goes a long way in every aspect of life, and it is vital to the process of estate planning as well. You just need to understand the asset transfer vehicles that are available to you and utilize them in an intelligent and well-timed manner. Depending on the specific details of your estate and the dynamics of your family, you may find that the best strategies for you are rather simple and straightforward, but elegant in their efficiency. We would like to highlight a trio of very useful estate planning tools here that everyone should take into consideration.
Life insurance is a basic, rudimentary estate plan component, but it is very important for certain people. If you are still in your working years and you have a family that is relying on your income, life insurance is an absolute must. It puts money directly into the hands of your loved ones when they need it the most and it provides the immediate liquidity that they will need to meet their day-to-day expenses.
Pay On Death Accounts
Pay on death accounts, sometimes called transfer on death accounts, are a simple and common sense way to pass assets along on to your heirs. All you need to do is go to the financial institution of your choice, open a POD, and name your chosen heir as the beneficiary. Should you pass away, ownership of the account is automatically assumed by your beneficiary and in this way the transfer takes place without the hassle and expense of going through probate.
Giving Of Gifts
Gift giving is another great way to avoid probate and provide your heirs all or part of their inheritances directly. You also gain tax advantages, because there is a $1 million lifetime gift tax exclusion. In addition, each American may bestow gifts of up to $13,000 per year upon unlimited recipients free of the gift tax, and these annual gifts do not reduce your lifetime exemption.