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This time of the year evokes mixed feelings about the previous year. While some look back with regrets and longing; others want to look forward to a great new year ahead.<br /><br />Whichever club you’re in, changing your life for the better in 2018 is on everyone’s mind. Amongst all the contemplations and celebrations, financial planning should be on your agenda for the next year.<br /><br />While many of you might have savings invested in SIPs (Systematic Investment Plans), an urgent need of funds can’t be fulfilled with these plans in case of an emergency.<br /><br />A single life threatening incident can leave your family vulnerable and death can make all your financial planning go for a toss.<br /><br />The solution to this problem can easily be solved with a <keyword id="790532" type="PERSON" weightage="20" keywordseo="term-insurance-plan">Term Insurance Plan</keyword> (TIP) and it is the one thing you shouldn’t miss out on for long-term financial security for you and your loved ones.<br /><br /><strong>How does it work<br /></strong><br />A TIP will enable you to lead a worry-free life because it is the best income replacement tool and can help in the accomplishment of other financial goals even when the investor has expired. It is also a great way to save on your taxes.<br /><br />Here’s how TIP along with a SIP is the perfect combination to secure future financial goals:<br /><br /><strong>Affordable monthly premium<br /><br /></strong>A lot of people are unsure about buying a Term <keyword id="35450" type="COMPANY" weightage="20" keywordseo="insurance">Insurance</keyword> Plan because the wrong assumption is that they will have to pay a heavy monthly premium. <br /><br />Actually a Term Insurance Plan comes at nominal costs and offers great risk coverage. In fact, if you buy a term insurance plan when you’re starting your career, your premium will remain much lower, throughout. <br /><br />The main reason why TIP along with a SIP is the best way to make the best out of your money is because both the plans yield great returns. <br /><br />You can easily invest a chunk of 10 percent of your SIP investment on a term insurance and ensure a fairly good insurance amount for your loved ones. A Reference can be this table below:<br /><br /><br /><br />Many TIPs are also beneficial to non-tobacco users and females and provide them with special premiums.<br /><br /><br /><strong>A high life insurance amount<br /></strong><br />Apart from securing the financial future of your loved ones, Term Insurance Plans also ensures that they do not suffer from the financial liabilities that you might have had. <br />This is made possible due to the high insurance amount that they provide. Term plans help meet the regular expenses of all your dependents, and they also repay outstanding loans and debts in your absence. A good insurance amount also helps if you have many dependents in your family that will need financial protection.<br /><br /><br /><br /><br /><br /><strong>Enhanced protection<br /></strong><br /><br />Personal tragedies can come in many forms like death, terminal illness, and disability and a TIP can help in all these instances by allowing you to boost your insurance cover by choosing comprehensive additional benefits. <br /><br /><br />A fool-proof protection for your family members can be ensured by powering up your term insurance and choosing protection over accidental death and critical illness.<br /><br /><br /><strong>Flexibility to design the death benefit payout<br /></strong><br /><br />While you cannot experience the benefits of buying a TIP, your loved ones will be greatly secured and thankful because of it. <br /><br /><br />While they will be combating the trauma of losing a loved one, it will at least comforting that they are financially protected. <br /><br /><br />Term Insurance Plans also provide you with the flexibility to customize your death benefit in a way that meets your financial requirements. <br /><br /><br />Your beneficiaries have the option to avail the death benefit amount either as a lump sum or yearly payments.<br /><br /><strong>Great Tax Benefits<br /></strong><br />Under the Section 80C of the Income Tax Act 1961, term insurance plans offer tax benefits of up to Rs 1.5 Lakh annually. <br /><br />Buying a term insurance isn’t complicated at all and just like investing in an SIP, a term Insurance plan can be purchased online directly from the insurer's website. <br /><br />You can even make sure that you check on the premium rates available in the market to take the best decision for yourself, while enjoying the convenience online. <br /><br />This one wise step in the coming new year can be the safety financial belt for the rest of your life and even beyond.<br />Calculate your premium here:<br />
<iframe src="https://www.iciciprulife.com/term-insurance/iprotect-smart-term-insurance-calculator-times.html?UID=6027&amp;utm_source=TimesInternet&amp;utm_medium=BI&amp;utm_campaign=TIP-SIP&amp;cid=Display:Article:TimesInternet:Calculator:DM-TI-Article:iPS:TIP-SIP-BI:::Eng::6027:cpc:::" scrolling="no" width="100%" height="400" frameborder="0">
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<em><strong>Disclaimer: </strong></em><b><em><strong>The quotes are indicative and TIL bears no legal liability for the calculation.</strong></em></b><br /><br /><br /><b></b></img></img>

This is the only TIP you need while making your new year’s financial resolution

<p><a href="https://www.businessinsider.com/master-your-money"></a></p><p><div type="image" title="young couple travel vacation city" height="1131" width="1508" msid="76428360" hostid="261"></div></p><ul class="summary-list"><li>The idea of an investment plan can sound daunting and scary.</li><li>But, if you think of conquering it the same way people think about planning a vacation or wedding, it can be easier to deal with.</li><li>Here are a few ways you can make an investment plan that can support you for years to come.</li></ul><p>I often hear millennials talking about spending time, energy, and money on planning vacations and weddings, but very little (if any) time on their investment plans.</p><p>An investment plan determines how one allocates their investments – stocks, bonds, cash, and other assets – into an overall portfolio that matches the investors' goals, time horizon, risk tolerance, and priorities.</p><h2>Creating this kind of plan isn't much different from planning for a big vacation.</h2><p>To start, in both cases you need to do your homework to determine where you want to go and how you will get there. Just as you wouldn't show up at the airport and decide where to go, you should research the destination and plan how to get there.</p><p>Investment plans are no different.</p><h2>Know the steps needed</h2><p>The first step is to determine a goal (destination). Once that's decided, it's time to think about how to reach that goal, but most importantly, on time. When thinking about achieving those investment goals, diversification of investments is important because you will rely on different investments, at different times, and for different purposes, to help you achieve your goal.</p><p>You can think of this as all the modes of transportation that would be used to get to the destination.</p><p>The earlier I start planning, typically the better the outcome (or trip) I'll have, and often at a better price point.</p><p>Time is your friend in reaching your goals. Goals must be achievable within a realistic time period, and the more time you give yourself, the loftier goals you can set.</p><h2>Think about a plan B, C, and D</h2><p>You can and should expect to hit bumps in the road along the way, and with that in mind, you'll need a contingency plan.</p><p>Sticking with the vacation analogy, I often get delayed or rerouted when I travel and end up somewhere I never intended to go. Even with great <keyword id="159075" type="ORGANIZATION" weightage="60" keywordseo="INVESTMENT-PLANNING">investment planning</keyword>, unforeseeable events like market shocks (think of a thunderstorm grounding all flights) can happen that will throw a plan off course (delayed arrival).</p><p>But, don't get frustrated! When this happens, I adapt and adjust my plan and work as hard as I can to get back on track. I might have to sacrifice a little by saving more money (say, missing your first night at the hotel), but I move forward. When my outbound flight for vacation gets delayed, I don't give up and cancel the whole trip.</p><h2>It may be worth it to pay for help and guidance</h2><p>Focusing on cost is very important, but sometimes some extra money spent is well worth it. Although investment plans and portfolios can be built incredibly inexpensively, when the plan is big enough, I have hired professionals such as accountants, lawyers, or money managers to help navigate an area with which I am unfamiliar. You can think of these folks as a travel agent. In the end, their counsel has saved me both money and headache in making the plan a success.</p><p>If it's important that a one or two week vacation goes well and you are willing to spend time planning the trip, there's no excuse not to spend time planning your investment portfolio. If done properly, the portfolio can help support you for years – as opposed to just a week or two of fun.</p><p><em>This article was contributed by Scott Pedvis, a financial advisor with Wells Fargo Advisors, and a member of BI's Money Council.</em></p>

Creating an investment plan can be as easy as planning a 'baecation' or a wedding. Here's how.

<ul class="summary-list"><li>529 plans are state-run, tax-advantaged accounts earmarked for educational expenses, from kindergarten up through graduate school, and student loan paybacks.</li><li><keyword id="7974997" type="UNKNOWN" weightage="60" keywordseo="529-plan">529 plan</keyword> account earnings and withdrawals are tax-free; some states also allow deductions on contributions.</li><li>529 plan funds can affect financial aid and can incur tax penalties if withdrawn for the wrong uses.<a href="https://www.businessinsider.com/?hprecirc-bullet"></a></li></ul><p>Paying for college, as everyone knows, is an expensive proposition - and the costs keep going up each year, even outpacing general inflation. </p><p>One strategic investment to deal with educational costs is the <keyword id="10548942" type="UNKNOWN" weightage="60" keywordseo="529-college-savings-plan">529 college savings plan</keyword> or 529 plan for short. It's a financial account that allows you to invest and earn money tax-free, then pay for eligible academic expenses - not just college, but a range of schools - without owing any taxes.</p><p>In a sense, it's like a specialized <a href="https://www.businessinsider.com/how-to-invest-in-roth-ira" target="_blank" rel="noopener">Roth IRA</a>: Your funds are targeted towards a purpose and grow and be withdrawn tax-free. And also, that you could be penalized for ineligible withdrawals or uses of the money. </p><p>In this article, we'll share how a 529 plan is, why you should consider one, and what to watch out for.</p><h2>What is a 529 plan?</h2><p>A 529 plan is a tax-advantaged financial account. The money you contribute to it grows tax-deferred within the account. Withdrawals are tax-free when used for appropriate ("qualified" in IRS-speak) educational expenses: tuition, books and supplies, and room and board.</p><p>Traditionally, these accounts were designed solely to fund secondary education (i.e., a four-year college or university) tuition and related expenses. However, in the last few years, two pieces of legislation expanded their uses:</p><ul><li>The 2017 Tax Cuts &amp; Jobs Act allowed 529 plan money to be withdrawn tax-free to pay for up to $10,000 per year of elementary, middle, and high school tuition.</li><li>The <a href="https://www.businessinsider.com/personal-finance/529-plans-college-student-loans-technical-school-2020-4" target="_blank" rel="noopener">2019 SECURE Act</a> allowed 529 money to apply to student loans (again, up to $10,000 annually), and also to expenses for technical and trade schools, and apprenticeships offered through community colleges.</li></ul><p>While named for a section of the federal tax code, 529 plans are actually run by the states. You can establish one at a bank and or a financial services/investment company, like Fidelity, Vanguard, or T. Rowe Price. </p><p>Most accounts offer several investment options (usually <a href="https://www.businessinsider.com/etf-vs-mutual-fund" target="_blank" rel="noopener">mutual funds or ETFs</a>, ranging from conservative to aggressive). Many also offer pre-defined portfolios, like target-date funds, that are age-based: They grow more conservative the closer your child gets to college age.</p><p>The 529 plan account is opened and owned by an adult on behalf of the child, who's deemed the account beneficiary. It does not have to be owned by the child's parent - grandparents are common 529 account-holders - but personal information for the child (e.g. date of birth and Social Security number) is necessary to open the account.</p><h2>How much can you contribute to a 529 plan?</h2><p>The IRS does not technically place a limit on how much you can contribute to a 529 plan. Basically, most people limit their annual 529 plan contributions to $15,000 per child. Married couples can each contribute $15,000 per child, for a total of $30,000 per year.</p><p>Here's why: Contributions to it are considered gifts, so most people plan their deposits to dovetail the annual <a href="https://www.businessinsider.com/estate-planning-strategies" target="_blank" rel="noopener">gift tax exclusion</a> of $15,000 per recipient in 2021. The annual gift tax exclusion allows people to give money, getting out of their taxable estate, without having to pay any gift tax. </p><p>For those who can afford it, it is possible to supersize contributions using the five-year election strategy. With this move, you can make five years' worth of contributions in a single year. In 2021, the election maximum is $75,000. This strategy provides an immediate reduction in your estate and enables more money to start growing tax-free in the 529 account right away.</p><p class="quick-tip headline-regular">If you opt for the five-year election strategy, you do have to report the gifts for each of the five years, on <a href="https://www.irs.gov/pub/irs-pdf/f709.pdf" target="_blank" rel="noopener">IRS form 709</a>.</p><h2>Tax deductions for 529 plan contributions</h2><p>You contribute to a 529 plan with after-tax dollars - that is, you don't get a federal income tax deduction on the contribution at the time you make it. That's the trade-off for the balance growing tax-free.</p><p>However, you might qualify for a tax break on your state income tax return. <a href="https://www.invesco.com/college-bound-529-plan/529-tax-benefits#ca55976d-e14d-44f9-b547-b81fa11d7989" target="_blank" rel="noopener">Some 30 states</a> allow at least some sort of deduction of your contribution. The amounts allowed by state vary widely and the maximum deductions range from a flat figure, like $5,000 per taxpayer, to a percentage of the contribution (like a 20% tax credit), to the full dollar amount of the contribution. </p><p>In these states, a 529 plan offers triple tax benefits. Your contributions are tax-deductible, the money grows tax-free, and withdrawals for eligible expenses are tax-free.</p><p>You may be able to establish a 529 plan outside of your home state. But of course, as a non-resident, you won't qualify for any state tax deductions or credits. </p><h2>Potential drawbacks to 529 plans</h2><p>As advantageous as 529 plans can be, there are some drawbacks to this college savings tool. You can face penalties for withdrawing the money for the wrong uses, the balances may affect financial aid, and it can get complicated if college plans change.</p><h3>Are there penalties for withdrawing the money?</h3><p>Yes, if you withdraw the money for an ineligible use - or withdraw too much money (in cases where you're limited to $10,000 a year), and the IRS finds out, you pay a 10% penalty on the amount withdrawn. Plus, you will have to pay taxes on any gains.</p><h3>Will a 529 plan affect financial aid?</h3><p>Yes, 529 plan accounts do factor into financial aid and scholarship considerations. The good news is that plans owned by a parent or another adult factor less into the financial aid equation than if the plan were owned by the student. </p><p>Also, the plan money counts as assets, and overall, a parent's income weighs more heavily into the calculation for financial aid eligibility than assets do. No more than 5.6% of parental assets are included, compared to 22% to 47% of a parent's income.</p><p>Assets held in someone else's name, like grandparents, don't count in financial aid considerations at all. However, 529 plan withdrawals from accounts owned by someone other than a parent are treated as non-taxable income for the student the following year. </p><p>If the child has won scholarships for their undergraduate degree, 529 money can be saved for graduate school or additional qualified education expenses later in life. Or to pay off student loans, if they incurred them.</p><h3>What happens if a child doesn't go to college?</h3><p>Since the use of 529 funds is earmarked for education, a child not attending or dropping out of school could be a problem. </p><p>However, there are options. The money can continue to grow tax-deferred in the 529 plan to be used at a later date - there's no time limit to them. </p><p>Also, a 529 plan can be transferred to another beneficiary, including yourself. As long as the new beneficiary is an immediate family member or family member's spouse, they qualify for a tax-free transfer of the 529 plan. </p><p>Most 529 plans allow the beneficiary to change once per year.</p><h2>The financial takeaway</h2><p>A 529 plan is a savvy way to save for any sort of secondary education, expensive private schools, or student loans. </p><p>The money grows tax-free and can be withdrawn tax-free for eligible educational expenses. You can withdraw any amount needed to meet academic university or trade school education costs. Withdrawals to pay K-12 tuition or student loans are limited to $10,000 a year.</p><p>If the child doesn't use the money right away, there are options. It can continue to grow tax-deferred for future educational expenses or be transferred to another relative without any tax penalties. </p><p>Worst case scenario: If you decide to withdraw the money for another, non-academic use, you'll owe taxes on any account gains and a 10% penalty. But you won't lose forfeit the funds, and you'll have gained the benefits of untaxed <a href="https://www.businessinsider.com/what-is-compound-interest" target="_blank" rel="noopener">compounding</a> on your money in the meantime.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/roth-ira-for-kids" target="_blank" rel="noopener">Opening a Roth IRA for your kids offers investment options, tax-free growth, and a great lesson in how to save</a></h3><h3><a href="https://www.businessinsider.com/estate-planning-strategies" target="_blank" rel="noopener">5 strategies for estate planning to get you started protecting your family and funds</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/529-plans-college-student-loans-technical-school-2020-4" target="_blank" rel="noopener">How to start saving for your kids to go to college, in 3 steps</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/is-college-tuition-tax-deductible" target="_blank" rel="noopener">Is college tuition tax deductible? Yes, you can reduce your taxable income by up to $4,000</a></h3><h3><a href="https://www.businessinsider.com/inherited-ira-rules-options" target="_blank" rel="noopener">Inheriting an IRA? Here are all the options and withdrawal rules beneficiaries should know</a></h3>

529 plans offer a tax-free way to save for and pay educational expenses - here's how these state-sponsored investment accounts work

<ul class="summary-list"><li><keyword id="402420" type="ORGANIZATION" weightage="60" keywordseo="Estate-Planning">Estate planning</keyword> is important for everyone, no matter their age or wealth.</li><li>Estate planning avoids taxes and legal tie-ups, and ensures funds are bequeathed as you wish.</li><li>An <keyword id="2373605" type="PERSON" weightage="60" keywordseo="estate-plan">estate plan</keyword> appoints the right people to take care of your kids and even you if you're incapacitated.<a href="https://www.businessinsider.com/?hprecirc-bullet"></a></li></ul><p>When you hear the word "estate," you might think of mansions, huge stock portfolios, art and antiques, and other pricey possessions like cars, yachts, and fine jewelry. The things high-net-worth individuals, especially elderly ones, own and leave behind them after they die.</p><p>But estate planning isn't just for the ultra-wealthy or the very old. Everyone, regardless of financial status or age, can benefit from having an estate plan - assuming you have assets to leave and people to leave them to.</p><h2>What is estate planning?</h2><p>Your estate is essentially everything you own, including your home or other property, car, bank accounts, investments, life insurance, furniture, and personal possessions. </p><p>An estate plan gives you a say in how those things are given to the people or organizations you care about. It arranges your affairs and leaves a written record of your wishes and intentions. It indicates how you want your property, belongings, cash, and financial assets distributed.</p><p>If you don't make these decisions and designations while you're alive and able, state law and probate courts will make them for you after you're gone. And the results might not reflect your desires or suit your family's needs.</p><p>Here are five major reasons why estate planning is important, and how it benefits you and your survivors. </p><h2>1. Estate planning goes beyond a will</h2><p>Many people think of a will and an estate plan as the same thing. They're not. </p><p>Both will and estate plans provide instructions for how your goods and assets should be handled after your death, but estate planning encompasses much more. It can also include:</p><ul><li>Durable powers of attorney to appoint individuals to make medical and/or financial decisions on your behalf you're unable to provide instructions yourself</li><li>Medical directives to outline the kinds of medical treatment you want (or don't want) if you become incapacitated</li><li>Beneficiary designations to explain who should receive money from life insurance policies, annuities, retirement accounts, and other financial accounts</li><li>One or more trusts to facilitate passing property to your heirs and potentially provide tax benefits for both you and your beneficiaries</li></ul><h2>2. Estate planning saves time and money</h2><p>When you die without a will, this means you have died "intestate," and the laws of the state where you live and own property determines what happens to your assets and who gives them away. The probate court will name a representative to distribute your assets. In many cases, the surviving spouse gets the job. If you don't have a surviving spouse and no other close family member is willing or able to do the job, the court will name a public trustee to distribute your assets according to state law.</p><p>While all of this is going on, no one can touch your assets or carry out your directives. They're frozen until the court system combs through every detail of your estate, applies state laws, pays off debts, and makes decisions about how to allocate your assets. </p><p>The probate process involves paperwork and court appearances by lawyers, and the estate pays their fees. It can be time-consuming, taking months and even years, especially in big cities or affluent counties. Given the legal bills, it can end up being quite costly for surviving family members.</p><p>You can significantly reduce the time and expense of dying intestate by estate planning. Specifically:</p><ul><li>Creating a will that names an executor of your estate</li><li>Making sure all your investment accounts (<a href="https://www.businessinsider.com/how-to-open-an-ira-for-retirement" target="_blank" rel="noopener">IRAs</a>, <a href="https://www.businessinsider.com/how-to-invest-in-a-401k-for-retirement" target="_blank" rel="noopener">401(k)s</a>, other brokerage/bank accounts) have correct, living beneficiaries. These designations render bequests in a will unnecessary</li></ul><h2>3. Estate planning avoids big taxes</h2><p>One reason estate planning is often associated with the super-rich: <keyword id="10526341" type="UNKNOWN" weightage="60" keywordseo="estate-taxes">estate taxes</keyword>.</p><p>Admittedly, <strong>federal</strong> estate taxes typically only impact the ultra-wealthy. That's because the estate tax exemption is $11.7 million per person (or $23.4 million for a married couple in 2021, meaning only people who die with assets valued above that sum pay federal estate taxes.</p><p>However, <strong>state</strong> estate and inheritance taxes can be another matter. </p><p>Estate taxes are assessed on and paid by, a deceased person's estate. Inheritance taxes are assessed on and paid by the deceased's heirs and beneficiaries. In some cases, the estate can arrange to pay inheritance taxes on their behalf.</p><p>As of 2020, <a href="https://taxfoundation.org/state-estate-tax-state-inheritance-tax-2020/" target="_blank" rel="noopener">twelve states</a> and the District of Columbia impose an estate tax, and six states impose an inheritance tax - and the thresholds for these can be much lower than those for federal taxes. For example, Massachusetts and Oregon tax estates valued at more than $1 million. In Nebraska, heirs may pay inheritance tax on anything over $10,000 (depending on their relationship to the decedent).</p><p>Also, the current federal estate tax exemption is slated to drop drastically in 2026: to $5.49 million per person, adjusted for inflation. If you have a family business to bequeath, a six-figure <a href="https://www.businessinsider.com/personal-finance/life-insurance-more-information-coverage-rates-policies" target="_blank" rel="noopener">life insurance policy</a>, or property likely to appreciate, your taxable estate could well reach that figure.</p><p>There are ways to ensure your property passes onto your heirs without the state or federal government taking a big slice of it first: You can set up trusts, make <a href="https://www.businessinsider.com/what-is-a-custodial-account" target="_blank" rel="noopener">irrevocable gifts</a>, or establish joint accounts. All these effectively remove assets from your estate. But you need an estate plan to execute these moves.</p><h2>4. Estate planning protects children</h2><p>If you die without a surviving spouse to take care of your children and other dependents, who will get custody of them?</p><p>Without an estate plan, the probate court will appoint a legal guardian/conservator for them - typically, a family member, such as a grandparent, as the guardian. Alternatively, a third party, such as a family friend, can petition the court to be appointed as the guardian. If a minor child has no surviving family members and a third party doesn't step forward, the child could become a ward of the state and enter the foster care system.</p><p>If you want a say in deciding who will care for your child in the event of your death, you need to identify that person in your will. It's also a good idea to name an alternate guardian just in case something happens to your first choice.</p><h2>5. Estate planning takes care of you, too</h2><p>Estate planning doesn't just come in handy once you're dead. </p><p>It can also include a durable power of attorney and healthcare proxy - two important legal documents that ensure your wishes will be carried out if you're temporarily or permanently incapable of handling them.</p><p>A durable power of attorney appoints a trusted relative or friend to manage your legal and financial affairs if you can't manage them independently. A healthcare proxy gives someone permission to make healthcare decisions for you if you can't communicate them yourself.</p><p>Without these directives, also known as a "living will," it could get complicated determining who among your loved ones is in charge and is legally allowed to take action. In the worst-case scenario, someone the court appoints or a hospital staffer unfamiliar with your wishes may wind up making decisions for you. </p><h2>The financial takeaway</h2><p>Estate planning isn't only for the rich, and it doesn't have to be an overly complicated or expensive process. An experienced estate-planning lawyer, also known as a trusts and estates attorney, can work with you to create an estate plan customized to your needs, financial affairs, and family situation. </p> <p> The sooner you get started, the better. But remember that an estate plan is only effective if you keep it current. Review your plan regularly - or after major life changes like marriage, divorce, or a death in the family. Keep an eye on changes in tax laws or other financial legislation too. If your estate plan is out-of-date, your heirs could still encounter some of the problems you tried so hard to avoid.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/inherited-ira-rules-options" target="_blank" rel="noopener">Inheriting an IRA? Here are all the options and withdrawal rules beneficiaries should know</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/parents-estate-plan-how-to-talk-about" target="_blank" rel="noopener">How to talk with your parents about their estate plan, even if they don't want to</a></h3><h3><a href="https://www.businessinsider.com/roth-ira-for-kids" target="_blank" rel="noopener">Opening a Roth IRA for your kids offers investment options, tax-free growth, and a great lesson in how to save</a></h3><h3><a href="https://www.businessinsider.com/how-to-nail-your-estate-planning-succession-wealth-management-2020-10" target="_blank" rel="noopener">How to nail your succession planning, and how that will change in the Biden era</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/estate-planning-mistakes-i-see-people-make-as-financial-planner" target="_blank" rel="noopener">I'm a financial planner, and there are 4 estate-planning mistakes I see people make over and over</a></h3>

Estate planning is an important strategy for arranging financial affairs and protecting heirs - here are 5 reasons why everyone needs an estate plan

<ul class="summary-list"><li><keyword id="402420" type="ORGANIZATION" weightage="60" keywordseo="Estate-Planning">Estate planning</keyword> directs how your assets get distributed if you die or are incapacitated.</li><li>An <keyword id="2373605" type="PERSON" weightage="60" keywordseo="estate-plan">estate plan</keyword> checklist includes a will, powers of attorney, and account <keyword id="6383600" type="DEFINITION" weightage="60" keywordseo="Beneficiary">beneficiary</keyword> designations.</li><li>Using an estate planning lawyer ensures your plan meets all legal requirements and stays updated.</li></ul><p>It's easy to see why estate planning is so often neglected - even by people who are financially savvy in other ways. Thinking about life after your death can be uncomfortable. However, it's one of the most important things you can do.</p><p>Estate planning isn't just for the ultra-wealthy, either. If you have property, investments, anything of value, you need an estate plan. If you have family or dependents of any kind, you need an estate plan.</p><p>Yet, only <a href="https://www.caring.com/caregivers/estate-planning/wills-survey">32% of American adults have a will</a> or other estate planning documents, according to Caring.com's 2020 Estate Planning and <keyword id="62647" type="COMPANY" weightage="60" keywordseo="Wills">Wills</keyword> Study, because they simply haven't gotten around to it or believe they don't have enough assets. That hesitation can cause problems down the road.</p><p>No matter how much or how little you have, estate planning determines the future of your belongings, your money, and your family after you die. It can also ensure you have a say in who makes decisions about your health and finances while you're still alive.</p><p>Here are the estate planning basics you need to know.</p><h2>What is estate planning?</h2><p>"Estate" is simply a fancy word for your stuff. So an estate plan inventories everything you have, from car to home, from bank accounts to life insurance policies. And then it outlines in writing what you want done with them. It becomes your voice beyond the grave, letting you direct who handles your affairs and inherits your assets.</p><p>The major elements of an estate plan state, clearly and definitively: </p><ul><li>Who gets what when you die</li><li>Who should execute your wishes</li><li>Who will handle your affairs if you become incapacitated</li></ul><h2>Why is estate planning important?</h2><p>Suppose you pass away without a will, the most basic (and some would say, most important) estate-planning document. In that case, your assets can get tied up in probate, a time consuming and potentially costly legal process in which the court ensures your final debts are paid, and assets are distributed according to state law. It can also cause disagreements among your heirs as they fight over who gets what.</p><p>Then there are federal and state estate and inheritance taxes. Although they often target ultra-high-net-worth individuals, they can impact six-figure estates too, especially on the state level. There are ways to avoid these "death taxes," ensuring your property passes onto your heirs without the government taking a big slice of it first. But you need an estate plan to execute these moves well in advance of your demise.</p><h2>What are the basic documents for estate planning?</h2><p>Many people think estate planning is essentially drafting a will. It's a good start, but it is just one aspect of a comprehensive estate plan. Here's an overview of the basic documents you need.</p><ul><li><strong>Last will and testament</strong>. A will details where you want your assets to go after your death and names an executor who will ensure they get to the right people or charities. I can also specify whom you want to serve as guardian of your minor children.</li><li><strong>Durable power of attorney</strong>. A durable power of attorney designated someone to act on your behalf, legally and financially, if you're unable to handle your own legal and financial matters. If you don't have a durable power of attorney, your family members may not have the authority to sign checks, file tax returns, collect your government benefits, manage your investments and handle other financial transactions if you become incapacitated. They'll have to ask a judge to appoint someone to manage these tasks, which can be time consuming and expensive.</li><li><strong>Health care power of attorney</strong>. A health care power of attorney appoints someone to make medical decisions on your behalf if you become incapacitated. This can include choosing which doctors treat you, deciding which tests to run, whether you should have surgery or certain medications or therapies.</li><li><strong>Living will</strong>. A living will provides instructions on the medical treatment you do and don't want if you can't communicate these decisions on your own. It relieves your family members from having to make difficult decisions about your care if you are terminally ill, in the late stages of dementia, seriously injured, in a coma, or near the end of your life. It can address things like the lengths medical professionals should go through to keep you alive, pain management, and organ donation.</li><li><strong>Beneficiary designations</strong>. When you purchase a life insurance policy or open a retirement account, you're typically asked to complete a beneficiary designation form. This form names the person or persons who will inherit the proceeds when you die. Beneficiary designations override any instructions for these accounts set out in your will, so it's important to review and update them regularly to ensure they're distribution upon your death matches your intent.</li></ul><h2>Other important documents for an estate plan</h2><p>Some other estate planning documents can come in handy, depending on your circumstances.</p><ul><li><strong>Living trust</strong>. A living trust can work as a tool for avoiding the probate process - that is, filing a will. You set up the trust, and place the assets you want to bequeath inside it. When you die, the trust distributes the assets as per your wishes. If you have a lot of assets, a trust can help you and your heirs avoid estate and inheritance taxes. </li><li><strong>Digital asset protection trust</strong>. What happens to your e-mail accounts, text messages, cloud-based storage accounts, websites, and social media accounts when you die? You can't give them away in your will because these digital assets may not be solely owned by you but by a tech company. A digital asset protection trust can help you legally transfer domain names, social media accounts and other digital assets to your heirs upon your death.</li><li><strong>Letter of intent</strong>. You may want to leave information or instructions that don't belong in a will for your heirs. This is where a letter of intent comes in handy. You can leave funeral and burial instructions, details about financial accounts, contact information for your attorney and financial advisors, where your executor can find titles, deeds, tax returns, birth certificates, and other important records. A letter of intent doesn't carry the legal weight of a will, but it can be helpful to your loved ones.</li></ul><h2>What are the main steps in estate planning?</h2><p>OK, you have a sense of what an estate plan entails, paperwork-wise. How do you go about creating those documents, and going about estate planning in general? Here are the three fundamental steps to get you started creating an estate plan that addresses your needs and wishes.</p><h3>1. Get help from an estate planning attorney</h3><p>Creating an estate plan may seem like a daunting task, but you don't have to handle it all on your own. In fact, estate planning should never be a DIY project.</p><p>But if you want it done properly, you need to call in a pro.</p><p>While you can find a lot of information and fill-in-the-blank estate planning forms online, trying to save a few hundred dollars in up-front costs can end up costing your heirs thousands later on. That's because most states have very specific requirements that must be met for your will and other estate planning documents to be valid. If these requirements aren't met, if the language isn't correct or the wording is imprecise, your instructions could be thrown out and your affairs handled according to state law.</p><p>That's why it's important to work with a qualified attorney or financial planner to create your estate plan. If you don't already have someone to help you, ask friends, family members, or other financial professionals you work with for a referral.</p><p>An estate planning attorney, also known as a trust and estates lawyer, also stays up to date with changes in tax laws and other legislation that could affect your assets and how you dispose of them. Working with other professionals, like accountants and money managers, they can help you develop <a href="https://www.businessinsider.com/estate-planning-strategies">estate-planning strategies</a>. And also ensure your plan is reviewed regularly.</p><h3>2. Identify guardians for minor children</h3><p>If you have minor children, part of the estate planning process involves selecting one or more guardians for those children. If you don't name a guardian, the court will decide who will raise your children, and you can't assume the judge will automatically appoint the person you think would be the best choice.</p><p>When selecting guardians, many people get hung up on timing. For example, a grandparent might be a good guardian for their toddler right now but might not be the best option a decade later, when the child is a teenager. However, your guardian selection isn't set in stone. Think about who would be the best person if something happens to you in the next two to three years. You can select new guardians at any time as circumstances change.</p><h3>3. Take inventory of what you own and owe</h3><p>Make a list of your assets and debts, including your financial institutions' names, account numbers, and names of contacts there. Keep this list, along with copies of your will and other important estate planning documents in a secure location. You might also want to give a copy to the executor named in your will or make sure they know where to find them in case anything happens to you.</p><p><strong>Quick tip:</strong> Although you can keep and distribute multiple digital or scanned copies of a will, bear in mind that your executor and/or attorney can only submit the original, actual document for probate after you die. Probate courts demand the real paper thing, with what's known in legalese as the "wet signature" on it - no substitutions allowed, even if they've been duly signed and witnessed.</p><h2> </h2><h2>The financial takeaway</h2><p>Estate planning is an important step in ensuring your legal and financial affairs will be handled when you die. It also makes life easier for your loved ones by drastically reducing the stress, expense, and red tape involved in handling your estate.</p><p>Drafting a will is just one component of an estate plan. If properly done, a comprehensive plan includes plenty of others, including powers of attorney, health directives, and beneficiary designations for your bank and brokerage accounts.</p><p>It might feel overwhelming to handle all of these tasks. You don't have to handle estate planning on your own - in fact, you shouldn't. With the help of a qualified estate planning lawyer, and other financial professionals, the process can be a lot more manageable. </p><p>It probably won't be the most pleasant project. Contemplating your own mortality never is. But a comprehensive estate plan can at least provide peace of mind.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/inherited-ira-rules-options" target="_blank" rel="noopener">Inheriting an IRA? Here are all the options and withdrawal rules beneficiaries should know</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/parents-estate-plan-how-to-talk-about" target="_blank" rel="noopener">How to talk with your parents about their estate plan, even if they don't want to</a></h3><h3><a href="https://www.businessinsider.com/why-is-estate-planning-important" target="_blank" rel="noopener">Estate planning is an important strategy for arranging financial affairs and protecting heirs - here are 5 reasons why everyone needs an estate plan</a></h3><h3><a href="https://www.businessinsider.com/how-to-nail-your-estate-planning-succession-wealth-management-2020-10" target="_blank" rel="noopener">How to nail your succession planning, and how that will change in the Biden era</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/estate-planning-mistakes-i-see-people-make-as-financial-planner" target="_blank" rel="noopener">I'm a financial planner, and there are 4 estate-planning mistakes I see people make over and over</a></h3>

What is estate planning? A strategy to safeguard your family and your finances, and ensure your plans for them get carried out as you wish

<ul class="summary-list"><li>An <keyword id="2373605" type="PERSON" weightage="60" keywordseo="estate-plan">estate plan</keyword> is important for everyone, regardless of income, to ensure your assets are distributed smoothly, fairly, and tax-efficiently to heirs.</li><li>Two immediate estate-planning strategies to do include naming beneficiaries for retirement accounts and powers-of-attorney if you're incapacitated and unable to make decisions.</li><li>Other estate-planning strategies include establishing trusts and lifetime gifts to avoid or diminish <keyword id="10526341" type="UNKNOWN" weightage="60" keywordseo="estate-taxes">estate taxes</keyword>.<a href="https://www.businessinsider.com/?hprecirc-bullet"></a></li></ul><p>You may think <keyword id="402420" type="ORGANIZATION" weightage="60" keywordseo="Estate-Planning">estate planning</keyword> is just for the wealthy. Affluent people have more assets, true. But they aren't the only ones who benefit from thinking about what they will pass on to their loved ones and how to make that transfer as smooth as possible.</p><p>Without an estate plan, it can be more difficult, time-consuming, and expensive for heirs to handle your financial accounts, property, and other assets, making sure everything is distributed in the way you wanted it. </p><p><a href="https://www.businessinsider.com/personal-finance/how-to-make-a-will-without-a-lawyer">Making a will</a> is a good first step. But an "estate plan" - really just a fancy term for getting your affairs in order - goes beyond that. It not only communicates your wishes, it organizes your finances to ensure that your estate - essentially, everything of value that you own - is handled as fairly and tax-efficiently as possible. </p><p>Estate planning doesn't just involve what happens after death, either. It can also cover a situation in which you are severely incapacitated, either physically or mentally, and unable to make decisions.</p><p>Here are five estate-planning strategies and key moves to keep in mind for your funds and your family. </p><h2>1. Select key players to carry out your estate plan</h2><p>If you've drawn up a will, you've named an executor to it. But an important part of your estate planning process is deciding who will help you fulfill your wishes potentially while you are still living, as well as after death. These roles include appointing a:</p><ul><li><p><strong>Durable power of attorney (POA)</strong>. This person steps in to make financial decisions on your behalf if you are temporarily or permanently unable to make those decisions independently. </p></li><li><p><strong>Health care power of attorney</strong>. This person steps in to make medical decisions on your behalf if you are temporarily or permanently unable to make those decisions yourself. It can be the same individual as the regular POA, or a different person.</p></li><li><p><strong>Guardian</strong>. If you have minor children when you pass away, the guardian will raise your children and make decisions about where they live, go to school, and other activities.</p></li></ul><p>Carefully consider who you want in each role and discuss it with them to ensure they are willing and able to step into the role when needed. Then have a document officially naming them drafted, signed, and notarized. </p><h2>2. Select or review the beneficiaries on your retirement accounts</h2><p>The bulk of many people's holdings are in retirement accounts, like 401(k) plans and IRAs. A beneficiary is a person (or persons) who inherits the money in the account after your death. </p><p>Naming a beneficiary might seem like a formality. It's not. </p><p>It's a legal designation that directs the account's custodian/administrator (the financial firm holding or managing it) how to release the funds. Part of the contract between you and the custodian, your beneficiary designation trumps anything or anyone named in your will. So selecting your beneficiary is important.</p><p>You may well have named a beneficiary when you established your account - it's usually part of the paperwork. But it pays to review it, and update any time you have a major life event, such as a marriage, divorce, or death in the family. If you leave as a beneficiary a now-ex-spouse, your heirs will have a major battle to stop the funds from going to them, and they'll still probably lose.</p><p>If you don't have any living beneficiaries named when you die, your retirement account can wind up in probate court, and the court will decide how to distribute it - a messy, time-consuming procedure. </p><h2>3. Familiarize yourself with the federal and state "death taxes"</h2><p>The federal estate tax impacts a very small (and wealthy) segment of the population, but it's still a good idea to familiarize yourself with it - especially since the regulations are changing in the not-too-distant future.</p><p>When someone dies, the federal government imposes a tax on their estate's value. In the eyes of the IRS, the estate includes all the cash, real estate, investments, business interests, and other assets owned by the deceased person when they passed away. The tax applies to, and is paid by, the estate - not those who inherit it.</p><p>The estate tax only kicks in for estates of a certain size - above a certain exemption amount, in IRS-speak.</p><p>For 2021, the federal estate tax exemption is <strong>$11.7 million</strong> per individual estate ($23.4 million for a married couple's, if they die together). However, the current exemption expires on Jan. 1, 2026. At that point, it will revert to its pre-2018 level of <strong>$5 million </strong>for individual estates ($10 million for married couples), adjusted for inflation. </p><p>It still sounds like a lot, but bear in mind that an estate encompasses all your assets. If you've a business to bequeath, a six-figure <a href="https://www.businessinsider.com/personal-finance/life-insurance-more-information-coverage-rates-policies" target="_blank" rel="noopener">life insurance policy</a>, or property that's appreciated a lot, your taxable estate could well hit that $5 million.</p><p>In addition to the federal estate tax, <a href="https://taxfoundation.org/state-estate-tax-state-inheritance-tax-2020/">12 states and the District of Columbia impose an estate tax</a>.</p><p>Six states also impose an inheritance tax, which directly taxes heirs rather than the estate. So it's a good idea to familiarize yourself with the estate or inheritance tax laws and exemptions in any state where you live or own property.</p><h2>4. Take advantage of the annual <keyword id="558932" type="PERSON" weightage="60" keywordseo="Gift-Tax">gift tax</keyword> exemption</h2><p>One way to avoid the estate tax when you die is to give away money while you're living.</p><p>The annual gift tax exclusion allows you to give up to <strong>$15,000</strong> per person per year free of  - no need to report the gift. Married couples can give $15,000 each, meaning together they can give a total of <strong>$30,000</strong> per person per year.</p><p>If you give more than that amount, you don't necessarily have to pay taxes on those gifts, but you do have to file a federal gift tax return. Also, those gifts count toward your lifetime estate exemption limit. For example, if you give someone a $30,000 gift, your lifetime exemption amount would be $15,000 lower because that's how much of your gift exceeds the annual exclusion. </p><p>If you want to make a bigger gift, you can contribute up to $75,000 to a 529 college savings plan in one year and elect to treat it as if you made it over five years.</p><p>Other ways you can give money to loved ones without triggering the gift tax include:</p><ul><li>Gifts to your spouse (capped at $159,000 in 2021 if your spouse is not a US citizen)</li><li>Tuition payments made directly to the educational institution</li><li>Medical expenses paid directly to the medical facility</li></ul><h2>5. Establish a trust</h2><p>Another way to pass wealth smoothly to your heirs and bypass taxes is to <a href="https://www.businessinsider.com/personal-finance/what-is-a-trust-fund-estate-planning-tool" target="_blank" rel="noopener">establish a trust</a>. Tailored to meet different estate planning needs or goals, the major types of trusts include:</p><ul><li><strong>Revocable trust:</strong> A revocable trust, aka a living trust, can be altered or canceled at any time. When you put your assets in a revocable trust, you get to keep any income they earn, and control over them. After your death, assets transfer directly to the beneficiaries you name in the trust - they won't have to go through probate, as they would if bequeathed in a will. They will count as part of your taxable estate, however.</li><li><strong>Irrevocable trust: </strong>An irrevocable trust works the same as a revocable one, but it can't be modified or terminated without the permission of your beneficiaries. After transferring assets into the trust, they are no longer part of your estate, so they won't be subject to estate tax.</li><li><strong>Grantor retained annuity trust (GRAT):</strong> If you own stock that you expect to increase in value, you can put it in a grantor retained annuity trust. This gives you the right to receive an annuity over the trust's term, typically two to five years. After that, the stocks in the trust are distributed tax-free to your beneficiaries. However, if you die during the GRAT term, the assets are still included in your estate.</li><li><strong>Irrevocable life insurance trust (ILIT):</strong> You fund an ILIT with a life insurance policy, and the trust is both the owner and beneficiary of the policy. When you die, the trust collects the policy's death benefit and pays it out to your beneficiaries. Life insurance benefits are always free of income tax; <a href="https://www.businessinsider.com/personal-finance/how-why-set-up-life-insurance-trust-children" target="_blank" rel="noopener">putting them in a trust</a> also effectively frees them from counting towards estate taxes as well.</li><li><strong>Charitable remainder trust (CRT):</strong> A charitable remainder trust allows you to get a partial tax deduction for contributions to the trust. While you're living, you can receive income from the trust. At the end of the trust's term, any remaining trust assets are distributed to one or more charities or non-profit organizations that you name.</li></ul><h2>The financial takeaway</h2><p>Some estate-planning strategies are simple to execute. Others, such as establishing trusts, need to be done carefully and precisely - with the help of a trusts-and-estate attorney or another financial professional.</p><p>The important thing is to get started now. And remember: Estate planning isn't a one-and-done proposition. The decisions you make this year may not meet your situation five years from now. </p><p>Even if your life or finances haven't federal and state laws and exemption amounts do. That's why it's important to review your estate plan regularly. </p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/inherited-ira-rules-options" target="_blank" rel="noopener">Inheriting an IRA? Here are all the options and withdrawal rules beneficiaries should know</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/parents-estate-plan-how-to-talk-about" target="_blank" rel="noopener">How to talk with your parents about their estate plan, even if they don't want to</a></h3><h3><a href="https://www.businessinsider.com/roth-ira-for-kids" target="_blank" rel="noopener">Opening a Roth IRA for your kids offers investment options, tax-free growth, and a great lesson in how to save</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/estate-plan-for-generational-wealth-2020-11" target="_blank" rel="noopener">Father-son financial advisors find too many people have a blind spot around estate planning, and they use 2 strategies to break through</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/estate-planning-mistakes-i-see-people-make-as-financial-planner" target="_blank" rel="noopener">I'm a financial planner, and there are 4 estate-planning mistakes I see people make over and over</a></h3>

5 strategies for estate planning to get you started protecting your family and funds

<p><div class="KonaFilter image-container float_right"><div class="image"><p class="source"><span><a href="http://www.apimages.com/OneUp.aspx?st=k&amp;kw=foxconn&amp;showact=results&amp;sort=relevance&amp;intv=None&amp;sh=10&amp;kwstyle=and&amp;adte=1348498150&amp;pagez=60&amp;cfasstyle=AND&amp;rids=e7eb921d687649e5b98cbb805883601d&amp;dbm=PY2010&amp;page=1&amp;xslt=1&amp;mediatype=Photo">AP Images</a></span></p></div><p></p></div>Taiwan technology giant Foxconn group has signed a letter of intent to invest up to $1 billion in Indonesia as it seeks to diversify production away from China, officials said Sunday.</p>
<p>Foxconn, also known by its Taipei-headquartered mother company Hon Hai Precision Industry which is the world's largest contract electronics maker, said the investments would be in Jakarta province, which has better infrastructure than other regions of the country.</p>
<p>"We plan to come up with detailed investment plans for the Indonesian and Jakarta authorities in three months," a Hon Hai official told AFP.</p>
<p>The investments would be completed in three to five years in areas ranging from R&amp;D, electronics software design and Internet business to manufacturing and assembly of electronic products, she said.</p>
<p>The move is part of the conglomerate's efforts to diversify investments from China where it has set up huge manufacturing facilities to make products for Apple -- including iPhones -- as well as Sony and Nokia.</p>
<p>The group employs about one million workers in China, roughly half of them based at its main facility in the southern city of Shenzhen.</p>
<p>But officials from the group said China was gradually losing its attraction as a global factory featuring cheap labour and land.</p>
<p>Foxconn in late 2013 also announced that it was planning to spend $40 million in manufacturing and research facilities in the United States.</p>
<p>The group has production facilities in more than 10 countries, including Vietnam, Brazil and Mexico.</p>
<div class="nc_footer">
<p>Copyright (2014) AFP. All rights reserved.</p>
</div>

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