But it's important to look past its sentimental value and focus on the financial aspects to make the best decision for your future. When it comes to divorce, the family home is a particularly emotional matter. Consulting with a Fidelity financial professional is also a good idea. Here are the top things to know about 5 broad categories of assets you may own, as well as some considerations when planning for the future for your children. To help ensure that you come to an agreement that is fair and equitable to both of you, it's important to know what you have now and understand how your divorce agreement could potentially impact your net worth, income, and lifestyle. The worst part is often dividing everything you've worked so hard to build together. As mentioned previously, working closely with your attorney or tax advisor is recommended.A divorce can be painful and messy. Permanent life insurance with an irrevocable life insurance trust can be an efficient and effective way to transfer your wealth and leave a legacy to your heirs, while term life insurance can be used to replace lost income in your working years in the event of your premature death. Under current law, both temporary and permanent life insurance proceeds are transferred income tax-free to your beneficiaries. One way to incorporate permanent life insurance into your estate plan is through a properly established irrevocable life insurance trust that allows for the proceeds to transfer to your beneficiaries upon your death without estate taxes. Permanent life insurance covers you for your lifetime. Term life insurance enables you to protect your dependents for a specific period of time in the event of your premature death by providing resources to cover debt obligations and your lost income. There are two types of life insurance: temporary life insurance, such as term life insurance and permanent life insurance, such as whole life insurance or universal life insurance. Life insurance through an estate plan can be an efficient way to transfer your wealth to your beneficiaries. Owning your own business has unique implications for estate planning. Real estate is a commonly bequeathed asset, which is subject to its own legal restrictions. Timing and taxation of distributions are especially important when passing on retirement accounts. Keeping transfer on death designations up to date is the key to passing on investment accounts.Īlthough cash may have the advantage of liquidity, it may require extra planning to minimize taxes. Learn about your assetsįor each of the major asset types you own, find more details on how they can be handled in an estate and avoid common mistakes. You’ll have to consider what is part of your taxable estate, what is likely to go through probate (and if you can take action to avoid it), as well as the total value of your taxable estate.Ĭonsidering all your assets and the best way to treat each one can be complex working closely with your attorney or tax advisor is recommended. Your unique mix of assets will determine the best course of action for each asset type. Take into consideration your budget and what you'll need to live yourself what is likely to be left over? Make a list of your assets include all financial accounts, real estate, businesses, and valuable possessions.
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