The different strategies that can be advisable considering the specifics of your estate are many and varied, and some combinations of them can be somewhat complex. But there are many simple, tried and true methods that can be used to get assets into the hands of your heirs quickly and efficiently because the enable the avoidance of the consuming and expensive process of probate. It is widely acknowledged in the disciplines of math and science and the simplest solution is the best one, and so it can be with estate planning. With that in mind we would like to highlight three simples estate planning tools for you today.
The purchase of life insurance is a very direct and straightforward way to make sure that your family is protected financially in the event of your death. It is particularly important when you are the primary breadwinner as an income replacement vehicle, and life insurance is also effective as a way to prepare for business succession when there are multiple partners involved.
Pay on Death Accounts
Another simple and efficient way to transfer assets directly is though pay on death (POD) and transfer on death accounts. You open one of these accounts at the bank and name your beneficiary or beneficiaries and they assume ownership of the funds upon your death. You can do this with some brokerage accounts as well, making the POD route a very effective solution for many people.
Giving gifts is a great way to pass assets along to your loved ones. You avoid both probate and estate tax, and if you stay under the $1 million lifetime exclusion you elude gift tax as well. Plus, you can give up to $13,000 per year to as many people as you want to without impacting your lifetime exclusion. One can also give unlimited educational or medical gifts tax-free, and once again, they do not reduce your lifetime gift tax exemption.