Estate planning is a complicated and on-going process. It can seem tiring because you need to frequently update your plan, based on changes in your personal circumstances, as well as changes in the tax laws. Although there is no way out of the frequent reviewing of your estate plan, you can simplify the entire process by following a few do's and don'ts.
Estate Planning Do's
Create a plan that is flexible. Your plan should take into consideration the possibility of a substantial change in estate laws. This has happened in the past and can happen again.
Make a Will. Picasso died without a Will and we know the result of such a big omission. An ill-drafted Will can also be effectively useless, as it might fail to convey your wishes properly. A Will that has several loopholes can easily be challenged in court.
Establish a trust. Similar to a Will, a trust helps you protect the interests of your family. Trusts are often used to hold real estate for a beneficiary and can be highly tax friendly.
Donate land that you do not plan into develop to a charity.Giving away land for charitable purposes enables you to receive income tax deductions and reduction in estate taxes.
Estate Planning Don'ts
If you own a small business or a farm, don't assume that you'll receive special estate tax benefits.These tax breaks were done away with in 2004.
Don't expect estate taxes to be eliminated permanently.
Don't change your plan, such as canceling life insurance, without consulting your lawyer. Such a change could lead to countless legal hassles.
Don't think you don't need a backup plan. There is a chance of you outliving your beneficiary.