The Four Pillars of Estate Planning
Many people have two mistaken beliefs when it comes to estate planning: first, that it is only for the wealthy; and second, that it is only important if you want to reduce estate taxes.
However, estate planning is much more than simple tax reduction. There are four essential pillars – or goals – to the estate planning process:
Financial Security. A secure financial future for you and your heirs is one of the major priorities of estate planning. The first priority is to ensure your own financial security, or there would be nothing to pass on to heirs.
Estate Management. Those who will benefit most from your estate may not be the ones who are the best equipped to manage it. Therefore, it is essential to utilize estate planning tools like trusts to ensure that the estate is managed properly for the generations to follow.
Estate Protection. Protecting the estate from creditors, lawsuits or even ex-family members can be accomplished through a variety of estate planning strategies, including limited partnerships, trusts, IRAs, annuities and liability insurance for businesses.
Estate Tax Reduction. Estate planning allows you to pass along estate assets with the lowest possible tax consequences to heirs. Most people do not realize the unintended tax burdens they may be passing along with inherited IRAs or other retirement accounts. An estate planning attorney is the best defense against unintended tax consequences.
