If you want to provide for relatives through smart estate planning, you have many options. Many common estate planning structures, such as wills, trusts, and retirement accounts, protect assets for the benefit of relatives.
Providing for Relatives with a Will
A will is one of the simplest and most straightforward estate planning structures. It is a legal document explaining who should receive which of your assets (money, real estate, and more) after you pass away. You can give assets to as many people as you wish, and your will can include detail about which items go to which person.
Many people decide to give assets through their wills to relatives in need. But it can take some time after a person’s death for assets to be distributed. In addition, giving assets this way may cost some larger estates a lot of money in taxes (the recipients are not taxed on their inheritances).
Providing for Relatives with a Trust
Giving through a trust could prevent delay in providing for a relative who cannot wait months to receive an inheritance. When you place property in trust, you give up legal ownership of it to a trustee. The trustee manages and invests the property for the benefit of your chosen beneficiaries.
You can place property in trust at any point during your lifetime or upon your death. Also, you can place limitations on when relatives receive trust distributions and in what amounts. In this way, you can provide for relatives in the most effective way for you and them.
Providing for Relatives with a Retirement Plan or Life Insurance
Retirement plans and life insurance can give your relatives quick influxes of cash when they need it the most. Many retirement plans such as 401(k)s, IRAs, and pensions pay out lump sums or gradual payments to chosen beneficiaries upon a policy holder’s death. The same is true of life insurance. Importantly, you must specifically designate beneficiaries (usually by filling out a form through the plan administrator or company). Without a proper beneficiary designation, your relatives will not receive any payments. Instead, the money will become part of your estate.
Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.