Meaning of Estate Planning.
Estate planning simply means the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during the person’s life, in the event the person becomes incapacitated and after death.
It is essential to know how important Estate Planning seem to be, moreover, Estate planning simply means to decide and secure who will inherit your assets after your demise. The majority of people only think about earning more and increasing assets in their lifetime. They feel a little about what will happen to their assets after they are gone. It costs them dearly. However, estate planning is not just crucial for future generations. A well-thought-out plan has many more implications. In this post, we are going to point out how many blessings can estate planning brings to you, your family, and your future generations as explaining how important it is..
Importance of Estate Planning
1. Estate planning goes beyond a will
Many people think of a will and an estate plan as the same thing. They’re not, 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:
- Durable powers of attorney to appoint individuals to make medical and/or financial decisions on your behalf you’re unable to provide instructions yourself
- Medical directives to outline the kinds of medical treatment you want (or don’t want) if you become incapacitated
- Beneficiary designations to explain who should receive money from life insurance policies, annuities, retirement accounts, and other financial accounts
2. Estate planning saves time and money
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. 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.
3. Estate planning avoids big taxes
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. 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 irrevocable gifts, or establish joint accounts. All these effectively remove assets from your estate. But you need an estate plan to execute these moves.
4. Estate planning protects children
If you die without a surviving spouse to take care of your children and other dependents, who will get custody of them?
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.
5. Estate planning takes care of you, too
Estate planning doesn’t just come in handy once you’re dead.
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 are temporarily or permanently incapable of handling them. 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.
If you would like to know more on how important is Estate Planning in our today’s life, please contact any of our estate planning attorneys today.