Estate Planning Advice for Investors

Many investors focus on amassing as large a savings as possible, but some also want to create an estate plans to make sure that these assets are passed on to loved ones.


By following some proven strategies, it is possible to reduce the amount of associated estate taxes. The biggest mistake that investors make when estate planning is failing to understand the rules. If accounts are not properly created, there are a number of unwanted events that can occur.


As a result, if you are an investor who is interested in passing on your assets, you should make sure to follow the recommended tips below.


# 1 – Taxes during Estate Distribution


Because the first $11.4 million per person and $22.8 million per married couple are tax exempt, many investors with smaller estates need not worry about estate tax. Additionally, assets passed to heirs while a person is still alive are exempt from taxation if less than $15,000 per year in distributions are made.


Despite these general rules, there are a complex number of other regulations that govern the amount of taxes in these situations. To navigate this complex area, many people find it helpful to obtain the assistance of an experienced estate planning lawyer.


# 2 – Insurance Issues


Life insurance can be used to pass on a substantial amounts of assets to an investor’s loved ones. It can be complicated, however, to decide on the most appropriate type of insurance. Some people decide to purchase insurance policies that cover only a certain number of years, while other people decide to purchase a permanent life insurance policy.


# 3 – Roth Conversions


Investors often benefit from converting 401(k)s and traditional IRAs into Roth IRAs. In situations where a beneficiary’s tax rates at higher, it is often a wise idea to convert an IRA and to pay taxes at current rates.  In situations where’s a beneficiary’s income is less, it is often a better strategy to leave a traditional IRA or 401(k) account alone, which means that a beneficiary will pay at a lower rate.


# 4 – Annuities


Insurance policies are often used to provide the policy holder with incomes immediately or at a fixed point after the purchase of an insurance policy. In some cases, a life insurance policy requires naming beneficiaries who will receive income after a person’s death. Because each annuity is unique to the policy holder, it is often critical to understand every terms of an insurance policy.


# 5 – Record Retention


The Internal Revenue Service expects people to maintain accurate records reflecting their investments. Following a person’s death, many assets are “stepped up” so their cost basis is altered, which avoids a number of obstacles. It is still possible, however, for a number of obstacles to arise which is why it is a wise idea to make sure to retain everything relevant to record retention.


Speak with an Experienced Estate Planning Lawyer

There are a number of complex regulations that dictate the estate planning process. To learn more about how this process works, do not hesitate to contact Ettinger Estate Planning today to schedule a free initial consultation.

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