A common misconception that is passed around in the financial world is that only wealthy people need to plan their estate, but Gabriel Fenton, Boulder, CO-based financial expert, is ready to put this myth to rest. No matter what size someone’s estate may be, it is always wise to have a proper estate plan set up. That way, when that person passes away, the assets will be inherited by the appropriate parties. Having a carefully organized estate plan can also reduce tax implications that beneficiaries have to pay upon inheritance. In order to ensure that people do not mismanage their estate plan, Gabriel Fenton, Boulder, CO, has revealed some helpful tips that will make the process much simpler and less complicated.

  • The first thing that should be taken care of in an estate plan is declaring what parties receive which items. Gabriel Fenton, Boulder, CO indicates that, if someone fails to prepare a will, then their local governing body will decide who inherits their belongings. This includes all types of assets, not just finances. People with priceless items or heirlooms will want to carefully plan out their estate so that the appropriate parties are the beneficiaries.
  • People planning their estate should choose how their financial assets are going to be spent. If people are planning to use their assets to pay for specific expenses after they die, then they may need to create a trust that holds specific provisions. For example, if someone wants to allocate certain funds towards their children or grandchildren’s college expenses, then they will need to designate it in their trust. Gabriel Fenton, Boulder, CO, states that the trustee is a designated person who acts on behalf of the trust. It is their duty to ensure that the designated amounts are coordinated to cover their intended expenses.
  • Gabriel Fenton, Boulder, CO, advises estate planners to minimize their taxes. If people are expecting their beneficiaries to owe estate or income taxes on their inheritance, then they may have the opportunity to minimize these expenses through certain strategies. For example, some estates will leave taxable assets to charities if they are listed in the will as beneficiaries. If this is completed, then non-taxable assets like life insurance and after-tax savings can be left to other beneficiaries, like the children. Another tactic for reducing taxes is by gifting certain amounts of money to the beneficiaries while the person is still alive. If the gift is under a certain amount, it is considered non-taxable. This depends on local and federal regulations.
  • Some people can actually offset their taxes with insurance. Gabriel Fenton, Boulder, CO, explains how beneficiaries can lose a significant amount of their inheritance due to taxable assets. However, this can occasionally be offset with the proceeds that come from a life insurance policy. For example, if an estate planner indicates that a beneficiary will owe 50,000 dollars in estate and income tax, then the person who owns the estate can purchase a life insurance plan for that amount and then designate the beneficiary. Since most life insurance policy payouts are tax-free, the beneficiaries can receive this money to pay off their tax debt.

 

Gabriel Fenton, Boulder, CO, Advises Hiring A Team

It is always a good idea to work with a professional estate planning team. Some people need assistance with the process since it consists of several different fields. An estate planning attorney can help with the designing and composing of trusts and wills. They will ensure that the documents meet federal and state requirements and that all legal matters are settled. A local attorney would be the best choice since they are more familiar with the estate owner’s area and its restrictions. A tax professional will provide insight on how to minimize the amount of taxes that beneficiaries will have to pay on their inheritance. Gabriel Fenton, Boulder, CO, suggests hiring a financial advisor as well to help the estate owner design a proper investment portfolio to organize the assets. When choosing a financial advisor, it is crucial to find someone who is knowledgeable in the estate planning process and knows all the rules and regulations for retirement accounts.

When working with a team, Gabriel Fenton advises people to keep routine communication going with everyone involved. Everyone should be kept up-to-date on any changes and developments. Some confusion may arise for people who are not sure if their estate is large enough to require a team. At this point, the best course of action would be to interview a few financial advisors who can share their insight on the matter.

“People tend to procrastinate when it comes to setting up their estate. This can be detrimental, especially if someone were to pass away without a proper will or estate plan intact. I highly recommend that people seek professional guidance before they start planning out their estate,” says Gabriel Fenton, Boulder, CO.