Estate Planning 101 – What New Homeowners Need to KnowIf you are new to home ownership, you may not realize just how important estate planning is to securing your financial future and that of your loved ones. Chances are that the roof over your head is one of the most valuable assets you own, perhaps your most valuable asset. That makes your home a vital part of your estate, and that is why it is so important to do start estate planning as soon as possible. No one likes to think about estate planning. After all, planning for the disbursement of your assets means admitting that you will not be around forever. Even so, it is important to face the facts and think about how to best distribute the possessions you have worked so hard to accumulate, including your recently purchased home. Estate planning does not have to be a dense or complicated subject. In fact, planning for the disbursement of your estate may be easier than you think. Often the hardest part is getting started, and once you overcome that hurdle you may wonder why you put off planning your estate as long as you did. One of the most important things to consider when planning your estate is the combined value of the assets held in your name and the name of your spouse. The current exclusions for Federal estate taxes are quite generous, allowing you and your spouse to pass on several million dollars worth of wealth. That is certainly good news, but the news at the state level may not be so good. Many states have much lower thresholds for passing on assets, including real estate, tax free, so it is important to research the local laws and see where you stand. If you are currently working with a financial advisor, you can enlist their help to determine the total value of your holdings. If not, you may need to do the work yourself. Either way, it is important to get a solid picture of your financial situation, including the value of your recently acquired home. Keep in mind that having a will is an essential first step in any estate planning process. If you do not currently have a will in place, you have no guarantee that your property will be passed on the way you want or that your assets will be distributed fairly. If you do not currently have a will, that should be your number one consideration. Once you know what you have to pass on and have a basic will in place, it is time to think more seriously about estate planning and how you want your assets, and your home to be distributed. If your will was in place prior to the home purchase, you will need to amend the documents to include its value and your desired disposition. The distribution of a valuable asset like a home can be a complicated matter, especially if you have several children with unique financial circumstances. Do you want your home to go to one of your children, with them buying out their siblings? Would you prefer that the home be sold and the money distributed evenly? Are all of your children financially responsible or do some of them need some extra guidance? These are all important things to consider when planning your estate. It is not easy to face these kinds of questions, but they are an integral part of smart estate planning for new homeowners.
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