Estate Planning Strategies: Basic and Advanced Techniques for Your Assets

Mar 12, 2024 3 min read

After you pass, not only do you leave behind people you love, but you leave behind assets and property. Without advanced planning, you won’t get a say in who gets what after your death. It’s possible your belongings could go to someone other than your loved ones, like the federal government. 

With an estate plan, you can determine how your property and assets are distributed during your life and after your death. Here are some things to consider when estate planning

Why You Need an Estate Plan

Many people believe that only people with larger and more complex estates need to create an estate plan. However, that is not true. Estate planning is not just for wealthy people; it is important for all individuals. 

In fact, people with smaller estates may find that having a plan is more important because final expenses like funeral costs, probate court legal fees, outstanding debts and your tax liability will have a greater impact on your estate and how much you leave to your loved ones. Without naming your loved ones as beneficiaries, they could suffer from the lack of financial resources after your death. 

One of the biggest estate planning mistakes is not having a plan at all. By creating an estate plan, you have the final say in where your assets go. Whether it be leaving property to beneficiaries or donating a substantial amount of money to your charity of choice, sorting your assets will be easier if you make the final decisions rather than a court assigning them. 

Common Estate Planning Strategies

Simply stated, an estate planning strategy is a method that helps facilitate the distribution of your assets according to your wishes. There are several strategies that you should consider when estate planning. 

  1. Wills and Testaments

A will is a legal document that lets you state how you’d like your property and assets distributed after you pass, who should administer your estate and who will care for any minor children in your care. Having a will is probably the easiest way to delegate your assets. Additionally, anyone that owns property or cares for minor children should consider having a will.

  1. Trusts 

A trust is a legal entity created to hold assets that are used to benefit someone other than the creator of the trust, also known as beneficiaries. Almost anything can be placed in a trust including cash, stocks, bonds, insurance policies, possessions, etc. There are different types of trusts with different purposes. The type of trust you choose ultimately depends on the motivation for creating it. 

  1. Revocable and Irrevocable Trusts

A revocable trust can be changed or terminated during the grantor’s lifetime. Usually, a revocable trust is more common because of flexibility. For example, you may want to add grandchildren to your trust as beneficiaries or potentially remove property that you sold to someone. It is a bit easier to make these changes to a revocable trust.

Irrevocable trusts aren’t so easily changed. An irrevocable trust usually can’t be changed after it has been established. While it is possible, there is a lengthy approval process that could include going before a judge to make any changes to this type of trust. However, irrevocable trusts may offer some tax benefits and protection from creditors during a grantor’s lifetime that revocable trusts may not. 

  1. Gifts

According to the IRS, a gift is property — such as cash, art, vehicles, real estate, etc. — that is transferred to someone without the owner receiving anything in return. While a gift is an effective estate planning tool, you may encounter gift or estate tax if the gift value is above the annual gift tax limit ($18,000 for 2024). 

  1. Charitable Giving

Charitable giving could play a crucial role in your estate plan by ensuring your philanthropic wishes are met and can also be an estate tax planning strategy reduce your estate tax liability. You could incorporate charitable giving into your will or trust by leaving an organization or cause as a beneficiary.  

  1. Life Insurance and Retirement Accounts

Life insurance and retirement accounts play a part in most estate planning. Having a life insurance policy can provide protection for your family when the unexpected happens by leaving much needed income to your beneficiaries and loved ones. Similarly, any assets in your retirement funds will be given to designated beneficiaries on your account. 

Advanced Estate Planning Strategies for Special Circumstances

Estate planning doesn’t look the same for everyone. There are circumstances that present challenges to estate planning like having an extended family, blended family or even a loved one with special needs. There isn’t a clear direction on how wills and trusts should be laid out in these circumstances. This makes it more important to stay on top of your assets, even if it seems daunting.  

Blended Families

The key to estate planning for blended families is to be as transparent and thorough as possible. Maybe you want to provide for your stepchildren instead of your ex-wife. It is crucial that you update your beneficiaries and proxies so your estate doesn’t land in the wrong hands. In circumstances with a blended family, it’s possible that your assets could go to someone you don’t want them to, which makes it more important to make sure your estate plan is current and detailed. 

Special Needs

Planning for a child or dependent with special needs is also something to consider in your estate plan. How do you want this person to be provided for if you die or are too ill to provide care? It’s important to decide ahead of time to ensure they are properly cared for. Preferences for a child or dependent with special needs can be outlined in a will or a trust. 

Need Help Finding the Strategy for You?

Estate planning can get complicated easily when managing a lot of assets. If you start planning now, you can choose where everything goes. Contact a financial advisor at Farm Bureau to talk about what strategies are best for you.

*Neither the Company nor its agents give tax, accounting or legal advice. Consult your professional advisor in these areas.

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