Many governments have extended taxation filing deadlines due to COVID-19. If your state or federal government also has an extended period for filing returns, congratulations!!
As you will now have more time to prepare taxation planning documents. You can update your real estate plans and make necessary amendments to save high taxation amounts.
Real estate planning through a will is a thoughtful gift for beneficiaries and deciding who will receive what.
If your family depends on you for personal and financial needs, your will serves as a backup plan. You will be involved in how they can manage their needs and property. When you execute a financial power of attorney or set up a trust to advise beneficiaries for children, pets, healthcare services.
Some people believe that creating a will at an early stage is not a good idea, as they have all the legal documents.
Keep in mind, creating a will before filing a return has many benefits. We have broken them into three major categories. Let’s learn them;
1. You Will Have Idea About Individual Properties
While filing taxation, asset reviews are the top priority for every owner. It helps in accessing the real value and market value of assets and makes a clear taxation plan.
Since you are already working on assets assessments, then why not utilize the valuation for dual purposes. Creating a will at this moment, let you know who will be your heir after your death. When you have created a trust, it will cover everything you have to distribute.
To begin with proper assets planning, first of all, create a checklist of all your properties, including bank and investment options.
In some cases, like retirement funds, and investments, you have to assign nominees in advance, who will receive payment after your death. So, make sure the person must live and should not be your ex. Further, keep on building your list until you will have a handy list of all the properties.
If you created a list a few years ago, add new assets such as your home, office, vehicle, or other details to refresh it.
Pen down all essential details such as custodian and account numbers to have a clear picture of what you have.
Most importantly, think about your relationship with beneficiaries such as a spouse, children, and family members. If something has changed, update your will and document to eliminate after-death disputes in family members.
2. You Can Get Benefit of Estate Tax Benefits
Taxation season is the time when you are well aware of your assets and financial credibility.
So, the handy information helps you to think about ways to determine whether you will be eligible to pay estate taxes or not. You should also speak with your estate attorney to find a taxable amount on the estate.
The estate tax is tax to be payable after a person’s death to the state and federal.
So, when you are planning for your estate tax, check out your state rules.
In 2021, US federal estate tax exempted individuals from paying taxation less than the estate value of $11.7 million, and in the case of married couples, $23.4 million is the exemption limit. The good news is that your state won’t collect any amount in the way of taxation if the value is less than the prescribed limits.
In contrast to estate tax, Inheritance tax is a tax that is paid to the state only.
The federal government has no role in this regard. You just need to look at your state taxation slabs on inheritance tax.
Keep in mind, if you have lots of valuable assets and accumulation of all, these can eat a major portion of the property.
Be careful while executing POA templates for the family. Create the right plan that best fits your family needs and won’t harm your loved ones’ pocket.
3. Most Important Documents Affect Your Family Member’s Life
These could be several documents people prepare to secure your or a family member’s future.
But, a will is an important document that protects your kids, pets, and other beneficiaries right after you pass away. Even if you have some donation or plans, you can mention it in the will, and it will be executed by legal heirs.
For instance, if you want to donate for healthcare services, you can define a list of trusts who will receive a portion of the estate and invest wisely.
You can also assign beneficiaries by way of financial power of attorney. As these are POA will templates available on the internet, you just need to download and print them after filing important details.
Signing at the end can protect your kid’s future until they are 18 years old. You can also define a range of authorities that the person will handle when you pass away.
Some common categories for power of attorney are;
Buy life insurance
Conduct business transactions
Employ professional help
Handle financial or real estate transactions
Operate business interests
Tip to make or update estate plan this tax season
Creating and updating your property can be done in two ways.
First, you can hire a professional who will create a will for you. But this could be a little expensive, as you have to pay legal charges with a professional’s fee.
So, there is another way to look for online blank or POA templates that help you to create wills on your own. You just need to download the required template and fill in essential details.
If you are downloading blank templates, you must mention details regarding each asset and who will receive including complete name, address, and other information.
When you print out the power of attorney template, do not forget to note down, role, responsibility, and area of power for the concerned person.
The printout can solve your purpose, the next task is to keep it in safe custody, such as a locker. You can also hand over your will to a reliable relative who can read after your death. One last thing: timely creation helps you to create an effective estate plan and save your taxes.
Thanks for reading, please let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.