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Estate planning is a critical part of your overall personal financial plan. Estate planning, simply put, is the collection of steps you need to take to make sure that your loved ones are provided for in the best possible way, including lifetime planning and disposition of your property, at death.
Estate planning is carried out with legal documents such as wills and trusts, typically involves a lawyer, and may be very complicated if you have a lot of assets. However, every estate plan should start at the same point. You will have to decide who needs your financial support after you die, and how you want to protect them. As difficult as it is to sit down and plan for the day you die, it's essential, and a real show of love for your family and friends.
Estate planning lets you be the decision maker, even after your death. If you don't make certain decisions and set them forth in your will, the courts in your state will make these decisions for you. So, if you want to decide how your financial affairs will be settled, you must have an estate plan.
You need to know what basic planning documents will be required. A big part of estate planning for many people is making arrangements so that estate and gift taxes are kept to a minimum. State taxes may also be a factor, depending on where you live. There are a number of estate planning strategies that you can follow to maximize the amount of your estate and ensure that it is distributed according to your wishes. Your retirement plan assets are part of your estate, and you need to make provisions for how they are distributed as well.