Taking steps to help protect your estate is a key financial choice. With appropriate strategies, you may be able to maximize your opportunities and help manage stress and confusion for your loved ones.

1. 1. 1. 1. 1. The Big One: Probate
               Probate is the legal process that wraps up a person’s legal and financial affairs after their death. The probate process typically costs between 4-7% of the total value of your estate, but in certain circumstances it can cost more. While no estate strategy can completely eliminate the risk of an expensive probate, managing probate the process may be possible with a valid will and assets that avoid probate.[1]
               Some assets that avoid probate include:
               • • Property held in a trust
                 • Property given away before you die
                 • Jointly held property that isn’t common property
                 • Assets in a pay-on-death account
                 • Death benefits from insurance policies
                 • Retirement accounts with a named beneficiary

                

            2. Living Wills
               These aren’t to do with what happens after you die, but what to do before you die. Wills outline instructions on how to handle difficult decisions regarding your estate. Despite the importance of this document, only 34% of Americans have one. The #1 cited reason for not having a will is procrastination.[2]
            3. Tax Exemption Strategies
               In 2023, the estate and gift tax exemption is $12.92 million.[3] Potentially hundred of thousands of additional American households can take advantage of these strategies, passing on some of or all their assets free of estate taxes. Less than 1 our of every 1,000 estates will exceed the exemption.[4]
            4. Living Trusts
               Created and funded while you are alive, Living Trusts are composed of assets you choose to put into them. Managed by a trustee (usually you), the assets are structured to pass to a beneficiary or beneficiaries, automatically upon your death, much like a will.[5]
            5. Power of Attorney
               A written authorization empowering a person to execute personal and legal matters on your behalf. A good strategy may be to pick a person who either has some experience in these fields or has the necessary qualities to handle these decisions. This is often a spouse or adult child. A Durable Power of Attorney allows that person to act on your behalf, even if you’re incapacitated or otherwise unable to make decisions.

[1] TheBalance.com, June 3 2023

[2] Caring.com, 2023

[3] IRS.gov, 2023. The current estate tax exemption limit is scheduled to expire December 31, 2025.

[4] TaxPolicyCenter.org, 2020 (most recent data available)

[5] Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider using a professional who is familiar with the rules and regulations.