In my experience, estate planning is one of the areas of personal finance with the most widespread confusion. Unfortunately, this can lead to costly mistakes in time, money and stress on people's families.
However, settling the second spouse's affairs was more complex, even with advance planning. Everything from wills to banking to tax returns became more complicated.
Estate planning not only makes things easier for your loved ones if you become incapacitated or when you’re gone, but it also does these three important things.
If you have life insurance, you know you were required to pick a single or multiple beneficiaries when you purchased your policy. When you die, the beneficiaries receive the payout from the policy.
Before the original SECURE Act, IRA owners who died were able to leave their accounts to their children, grandkids, or other non-spouse individual beneficiaries, and heirs could stretch required minimum distributions (RMDs) over their own lifetimes, thus allowing the funds in the accounts to grow tax-free for decades.
Children are treated fairly when it comes to inheritance. But “fair” doesn’t always mean “equal,” especially if your family situation or assets are complicated. In some circumstances, giving kids equal inheritances may not be the best option.
