Serving South King County and the Surrounding Areas.

Protecting your assets for your family

On Behalf of | Apr 1, 2024 | Estate Planning |

There are many reasons Washington residents choose to set up an estate plan. One of the main reasons is to keep wealth and assets in the family.

This is important no matter the size of your estate. Even those with small estates could find their assets going to the wrong people or being heavily taxed if their estate plan is not set up properly.

If you want to keep your wealth within your family, here are some tips.

Have a valid will

Ensure that you properly draft and execute a will. This is the best way to clearly designate who you would like to receive each asset.

There are several requirements for a will in Washington. It is important to know these requirements and seek guidance with drafting your will to make sure all requirements are met to make the will valid.

Many people are interested in avoiding probate court. Your estate will need to go through probate court even if you have a will. However, naming beneficiaries for certain assets or accounts can prevent them from going to probate.

Review each asset, particularly insurance policies or retirement accounts, to see if you can designate a beneficiary.

Convert retirement accounts to Roth accounts

One common problem encountered during the estate administration process is the tax penalties that come with receiving certain assets. This is often seen with traditional retirement accounts such as a 401(k).

You can potentially avoid this by converting traditional retirement accounts to Roth accounts. Although the amount is still subject to income tax, any withdrawals by you or heirs are tax free.

One simple way to know your wealth is staying within the family is to gift it to your heirs while you are still alive. You are generally allowed to give up to a certain amount per person each year as a gift.

Gifts are typically tax-free and you can also avoid an estate tax. Plus, it is often more personally enriching to see your heirs benefitting from your gifts during your lifetime.