Estate planning is the process of accumulating and disposing wealth before death of an individual or estate owner. The most important goal of estate planning is to make sure that the greatest amount of the estate passes to the estate owner’s intended beneficiaries while paying the least amount of taxes. In this article, we will discuss 3 phases of estate planning.

I. Creation
Most people misunderstand that wealth creation is only for people already have financial stability or are married. In fact wealth creation is for anyone who is over the age of 18 and has a permanent job. If you work, no matter what income levels you are, you can start to save some money through financial planning. Some people who I know created their wealth by investing only $100 per month at first. Remember the rule that you have to pay yourself 10% from your income first then spend only for what you need and limit spending on what you want.

II. Preservation
After You have created your wealth through years of following your financial plan, you now have reached the age or time that you would like to preserve your wealth. Here are some things that you can do:

1. Buy universal life insurance
Universal life insurance policies give you the privilege to defer your income accumulated up to maximum amount allowed every year. If you die, the investment amount together with the life insurance will be paid to your designated beneficiaries tax-free. This is helpful to preserve your wealth.

2. Invest prudently
Through careful financial planning without any emotional buying or selling caused by fluctuation of stock market(such as stock crash, stock down turn), and if you monitor your plan annually, you should be able to build a sizable wealth for your estate.

3. Maximize your IRA or RRSP contribution
IRA and RRSP contribution allows you to defer you income tax until they are withdrawn. The more IRA and RRSP contribution up to maximum amount, the more taxes are deferred that give you more income to plan for your wealth accumulation.

III. Wealth transferring
By writing your will, your wealth will be distributed according to your wish to the beneficiaries.
It is the time to choose a knowledgeable and trustful person as your executor who will help to distribute your asset after you dies. You may want to form a testamentary trust if you have a disable beneficiary.
* By forming testamentary trust you can provide period of income for your disable beneficiaries. Since testamentary trust has it’s own tax status, it pays less tax if there is income retained every year.
* Use universal life insurance to pay for all deferred tax investment such as capital gain, so you can leave more wealth to your beneficiaries.
* Transfer some assets to join tenancy with the right of survivor, so your estate will not need to pay tax after you die.
The 3 phrases of state planning only provides you with a general idea of the subject, please consult with your financial planner for your specific needs.

I hope this information will help. If you need more information or insurance advice, please follow my article series of the above subject at my home page at:
http://medicaladvisorjournals.blogspot.com
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/

Kyle J. Norton
http://www.articlesbase.com/finance-articles/estate-planning-part-16-the-3-phases-of-estate-planning-736377.html