Washington residents may find it daunting to think about the complexities of estate planning.
Kiplinger outlines points you should keep in mind as you put together a comprehensive estate plan.
Caring for minor children
Your plan must address the issue of caring for your minor children if you and your co-parent were to pass away. Your will should name a dependable relative or friend to act as guardian, and you should provide specific directions about paying for child-rearing and education expenses. Life insurance can help pay these expenses.
Covering disability and long-term care
When you are in the work force, you may have disability insurance to help cover unexpected financial setbacks. In your retirement, you may find it difficult to fund the soaring costs of home health care services and nursing home care. To protect against this risk, you may want to purchase long-term care insurance.
Managing retirement accounts and taxes
You should regularly review the beneficiary designations in your 401(k) and IRA accounts. If a beneficiary has predeceased you or your marital status has changed, you may need to update these designations. Your adult children must take required minimum distributions of moneys remaining in your IRA and 401(k) at your death, and these distributions may be taxable. You may find it efficient from a tax planning perspective to convert a traditional IRA into a Roth IRA before your children inherit your accounts.
A complete estate plan takes into account the potential tax benefits of charitable gifts. Also, during your lifetime, you may want to structure asset transfers in a manner that minimizes estate and gift taxes.
Once you have your estate plan in place, you must review and update it periodically. Thoughtful planning can support your family financially and emotionally. You may visit our website for more information about estate planning considerations.