Are you an estate planning procrastinator? where to start

Many people procrastinate about estate planning. It’s easy to see why; after all, facing mortality is difficult, and deciding and documenting what we leave behind for our loved ones can become complicated.

But without a suitable one real estate plan on the spot, resolving your financial situation after you pass could create complications for your beneficiaries. There are numerous pitfalls with insufficient estate planning. To avoid them, here are some key things you should address to make sure your plan is solid.

Choosing between a Will and a Trust

Wills and trusts are legal tools designed to pass your assets to your heirs in the ways you want. A testament takes effect after you die, while a trustwith someone appointed to oversee it, can manage your assets while you are still alive.

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A probate is often used as a cost-effective option for those with smaller estates. A trust is often implemented when someone has a large estate, wants more control over asset distribution, and values privacy. Trusts help bypass probate – the court-supervised process of distributing your property. probably it is a public process that is expensive and time-consuming due to professional and administrative expenses. Depending on the type of assets or items you own, the court requires professionals to assess an accurate value and ensure that they are properly distributed to the rightful heirs.

Choosing the right person to administer the estate

People often choose family members to manage their wealth, but this can be challenging, especially if they don’t understand tax laws and have the expertise to manage certain types of complex assets, real estate and retirement accounts. In some cases, the process often becomes more expensive and time consuming.

Then there are family dynamics to consider when you are choose an executor. If family members don’t get along or agree on how the estate is managed, this can also add more time and expense – in addition to mental anguish. If you’re going the professional route to manage your estate, you want to balance the cost of paying a real estate expert versus a family member to navigate between the different pieces.

Understanding tax considerations and reducing the burden on heirs

You want to create the lowest possible tax burden on your heirs. Without an estate plan for tax reasons, your heirs could be hit hard.

Wills do not avoid estate taxes. Also known as “death tax,” the federal estate tax is a tax levied on a person’s inherited assets. Federal estate tax rates range from 18% to 40%, but generally only apply to assets over $13.61 million in 2024 (for 2025 inheritance tax exemption it amounts to $13.99 million for individuals and $27.98 million for married couples). Some states also charge an estate tax. The value of a property can determine whether it is exempt from state tax or not, and those thresholds vary from state to state.

Here are some ways to reduce the tax burden on your heirs:

A life insurance plan it can eliminate the tax consequences for your heirs. The death benefit, whether it’s a term or whole life policy, is generally not subject to income taxes unless the beneficiaries receive payments in installments.
A living trust it will usually include language that can maximize the property tax exemptions available in the state where they live. Most states have estate tax thresholds that are much lower than the federal threshold—Oregon’s exemption, for example, is just $1 million. A properly designed trust can be an important tool to ensure that allowable exemptions are fully maximized, potentially saving heirs a substantial amount.
Giving to your heirs annually while you are alive can be the most direct way to minimize inheritance tax. For 2024, annually gift tax exclusion is $18,000, which generally means that a person can give up to $18,000 to as many people as they want without having to pay gift taxes. For example, a grandparent could give $18,000 to each of their 10 grandchildren this year with no gift tax implications. In 2025, the exclusion increases to $19,000, with married couples effectively able to double that amount to $38,000 per beneficiary.
Converting Retirement Accounts to Roth Accounts TO to make sense. Heirs can pay tax on either inherited retirement benefits if they are in a 401(k) or individual retirement account (IRA). But if I inherit a Roth 401(k) or Roth IRAsthey will not have to pay taxes on them. If you have retirement funds that you won’t need, you may want to consider a Roth conversion to help reduce the tax burden on the assets your heirs inherit.

Long-term care

statistically shows that more than half of the elderly will need long-term care at some point. Planning for that possibility with long term care insurance can be important in preserving assets for your heirs. Even if you think you have enough retirement assets to pay for your long-term care, consider the scenario where you, your spouse, or both of you need long-term care long. What if you don’t have some kind of LTC insurance? Imagine working your whole life to accumulate assets, then getting sick and spending all your earnings on care, leaving significantly less or nothing to your heirs.

Think of all the time people spend planning a vacation or buying a house or car. But ultimately, estate planning is more important than all of that. Take the time to get your affairs in order and save your loved ones from undue stress. Having a solid and comprehensive estate plan can give you peace of mind and make it easier to pass wealth, property and other assets to your loved ones.

Dan Dunkin contributed to this article.

Appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this article for submission to Kiplinger.com. Kiplinger was not compensated in any way.

This article was written by and represents the views of our contributing advisor, not the Kiplinger editorial staff. You can check advisor records with help dry or with FINRA.