5 Tips To Estate Planning

Estimated reading time: 3 mins

Your estate is of great value, whether big or small. It is of utmost importance therefore that you have the right people inheriting your assets and carrying on with what you started. This is why estate planning is a must-do. There are a few pointers that can guide you in the estate planning process.

Here are 5 tips to estate planning:

  1. Prepare Your Will Early Enough

It is quite important that you define early enough who will get what in your estate so as to eliminate family disputes. It is advisable that you write this will when you are in good physical and mental health.

The probate system will take effect immediately you die to determine how your estate is administered. If you have a will in place, it will help guide in determining who gets what portion of your estate.

  1. Reduce Income And Estate Taxes

If you suspect that your estate’s beneficiaries may end up owing income and estate tax on the portions of your estate that they inherit, then consider reducing these taxes by implementing some tax-efficient strategies.

You could, for example, allocate taxable assets to a charity as a beneficiary if they are included in your beneficiary list. You can leave your tax-free assets such as after-tax savings, life insurance, and Roth retirement accounts to other beneficiaries.

You can also consider making money gifts under $13,000 to your beneficiaries and these gifts will be non-taxable. Do this while you are still alive.

  1. Create A Living Trust

If you intend to have part of your assets assigned to cover certain expenses, it’s important that you create a trust which specifies these provisions. You may want to allocate specified amounts of money to cover special needs and college expenses for certain persons.

The trustee included in the trust will be legally bound to make sure that the allocated amounts are spent to cater for these expenses. This trust will also help avoid the probate process which can be quite hectic and time-consuming. A living trust will simplify things.

  1. Use Life Insurance To Offset Taxes

The beneficiaries to your estate may lose a big sum of taxable assets that they have inherited to income and estate taxes. This, however, can be offset by making use of the proceeds from the life insurance.

If, for instance, your estate planner determines that your estate beneficiaries will owe say $250,000 of income and estate tax, you can consider purchasing a life insurance plan of a similar amount and place the name of the specific person who will owe these taxes as the beneficiary.

This money will be paid out in full tax-free to the beneficiary and they can use it to offset the owed taxes.

  1. Hire An Estate Planning Team

There are several people you can work with in your estate planning process. One is an estate planning attorney who will help with the creation of wills and trusts and ensuring that you comply with the state requirements. Another is a tax professional to help reduce the income taxes that your beneficiaries pay for what they inherit.

Another is a financial advisor who will help you create an investment portfolio of your assets.


These five tips will help you with estate planning. If you own a small business which you need planning for, here’s an estate planning guide for small business.

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