Mullen and Iannarone, P.C.
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Maximizing assets for heirs in estate planning

Individuals in New York who are working on their estate plan may wonder how to ensure that their beneficiaries get the most amount of money from that estate. Even those who fall well under the $5.45 million estate tax exemption can benefit from strategies that keep the money in the family.

Many people do not even make a will, and when this happens, the estate is divided in probate. This can be expensive for beneficiaries. Individuals should also check on assets that are not distributed through a will such as life insurance policies and retirement accounts and be sure they have correctly named beneficiaries. This is particularly important for people who may have a previous spouse listed, but there may have also been births or other changes to the family that will change the beneficiaries.

A trust can control how money is distributed to beneficiaries. Depending on the type of trust, it can also offer protection from taxes, creditors and others. Gradually converting a traditional IRA to a Roth IRA and paying taxes on the converted amounts over a period of years can result in a tax-free inheritance for heirs. Finally, tax-free gifts of up to $14,000 per year are allowed, and these can be used to reduce the value of an individual's estate.

Individuals may want to work with an attorney to prepare an estate plan. Even if they only plan to write a will, using the wrong legal wording or other simple errors may result in delays or misunderstandings. However, individuals might also find that there are many other options they would like to include in their estate plan. A trust might be the right solution for some families, and many people like to make provisions for the possibility that they become incapacitated. A living will, health care proxy and a power of attorney may cover medical and financial issues.

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