Estate Planning Tips

No matter the size of your estate, it is imperative that you have a proper estate plan in order to ensure that the intended individuals or organizations inherit your assets. An estate plan can help to limit the tax implications for beneficiaries. Here are a few basic estate planning tips to get you started.

Designate Who Gets What

If you do not have a will, your state’s laws will govern who inherits your assets. This is not limited to money. Things like a favored piece of jewelry or artwork will be passed down according to state laws.

You will want to check which assets your will can govern. Some tax-deferred retirement accounts and life insurance policies with named beneficiaries will supersede your will. Check with the financial institution that holds the asset for clarification.

Decide How It Will Be Spent

If you desire to have certain assets earmarked to cover specific expenses, you might want to consider creating a trust to handle this. For example, you might want to have specific funds designated to cover college expenses for a certain individual or individuals. The trustee of the trust is legally obligated to make sure the money is used for those expenses.

Minimize Estate and Income Taxes

There are some tax-efficient strategies you can often implement to reduce the amount of taxes owed by your beneficiaries. As an example, if you are planning on leaving money to charities, use your taxable assets. As a charity, they won’t pay taxes on the assets. You can then use tax-free assets like Roth retirement accounts and life insurance to leave behind for your other beneficiaries.

While alive, you can also start to reduce your taxable estate by gifting amounts to your beneficiaries. Up to $13,000 a year can be given as a gift and will not be taxable.

Leverage Life Insurance To Pay Taxes

A significant portion of your beneficiaries’ inheritance can be swallowed up by estate and income taxes. You can use life insurance to help with this. “For example, let’s say it is estimated that one of your beneficiaries will owe $75,000 in estate and income tax,” explains David Grant, a Las Vegas based estate attorney. “You can purchase a life insurance policy with a death benefit of $75,000 and name the person in question as the beneficiary,” he continues. “The life insurance proceeds will be paid to the beneficiary tax-free, so they will have the entire $75,000 available to cover taxes.”

Today it is easy to shop around and get multiple quotes to find cheap term life insurance. There really is no excuse not to make this part of your estate plan.

Too often people only focus on the areas of their finances that impact them during their lifetime and neglect putting an estate plan into place. This can be costly for your beneficiaries, and can sometimes even lead to bitter feelings if some feel they were unfairly left with nothing from your estate. This is not something you should put off.

What should I do if I have been injured at work?

If you are injured at work, your first action should be to report it to your employer. This should be done in writing or in front of a witness even if you feel that the injury is not serious. Some types of injuries do not cause pain or discomfort for up to two weeks after the injury occurred. For example, if you twist your back while lifting a heavy object, you may not feel that it is bad enough to report, but then find when you wake up the next morning you have severe back pain and can hardly move.

“Failure to report the injury could result in the employer denying responsibility for the injury and refusing to pay your medical bills and compensation for missed work due to the injury,” says Bradley Mainor, a personal injury attorney in Las Vegas, NV. “Private insurance companies generally refuse to pay medical bills for work related injuries,” he continues. “This could leave you with the responsibility for paying all of your medical bills related to the injury.”
Employers have different guidelines regarding worker’s compensation policies. You should review those guidelines to find out what your rights are. Generally, you must report an injury within a certain period of time, 24 hours for example. Some employers formally reprimand or issue a suspension without pay to employees who fail to report injuries.

Employees who are injured at work are entitled to payment of all medical bills related to the injury, temporary disability payments, and a money award if there is any degree of permanent injury. Temporary disability is payments that you would get if you lose wages due to your injury. A money award is compensation you might receive if your injury causes a permanent impairment. For example, your back injury causes permanent damage resulting in your inability to perform your normal job tasks.

Each state has their own workers’ compensation laws that govern on-the-job injury claims. Employers, in accordance with state law, are allowed to have their own internal guidelines for work related injuries that fall under the state worker’s compensation laws.

It is in your best interests to report your injury to your employer immediately if you are injured on the job. Review your employer’s workers’ compensation guidelines for additional information on procedures that you must follow to receive compensation. This will help you avoid losing any benefits that you may be entitled to and being forced to pay for your injury out of your own pocket.

The Different Types of Estate Planning Trusts

Trusts are often used in the realm of estate planning. Here some definitions and explanations of the different types to help you understand them better.

Build Up Equity Retirement Trust (BERT)

This is a tax sheltered irrevocable trust that is set up by each spouse for the benefit of the other spouse. Annually, gifts are made to the trust. The assets are accessible, but exempt from gift and estate taxes. The irrevocable nature of the trust protects the assets from creditors. Upon both spouses deaths, the assets are passed on to the intended beneficiaries.

Qualified Personal Residence Trust (QPRT)

This type of trust gives you the ability to move your primary or your secondary (or both) residence out of your taxable estate but still allowing for you to keep possession of and use the residence. Upon your death, the home is then transferred to your intended beneficiaries. It does work for reducing your taxable estate, but can make things quite complex if you decide to sell the property inside of the trust.

Grantor Retained Annuity Trust (GRAT)

This is another form of an irrevocable trust. In this one, the grantor transfers assets into the trust and is given rights to annual payments of a fixed amount of principal and interest for a designated number of years. At the end of the designated time frame, the remaining assets go to the beneficiaries as set out by the grantor.

Irrevocable Life Insurance Trust (ILIT)

This is special type of trust that holds and is the beneficiary of a special type of insurance. The insurance policy inside this trust is guaranteed level premium, guaranteed benefit and it can be placed on the life of either one or both spouses. The payout from the policy is not estate taxable and it is specifically designated to pay the estate taxes.

Inheriting Trust

This is a trust designed by the inheritor to receive an inheritance. It offers some asset protection and estate tax planning benefits, but still gives the inheritor all the rights, benefits, and control over the trust assets that the individual would have.