During an individual’s lifetime, he or she must have acquired substantial assets which would be left on earth upon death, and as such, there becomes a rising need to plan for how these assets will be disposed, protecting these assets before they get disposed while minimizing the taxes and costs that come which such disposition. Some wish for their assets to fall into the ownership of their spouses and children only, others having no surviving family may wish to leave their funds to charity. The process of putting all these plans and wishes into documentation is referred to as estate planning.
Estate plans can only be achieved and implemented with only the appropriate documents with proper inclusions. It is quite easy to sit alone and make this plans, however, any wrong details, or documentation may result to loss of assets, properties, investments, retirement benefits, and even more annoying and draining probate process.
Estate planning documents in which you need to have documented while you are still alive and well includes, wills, living trust, advance medical directives and durable power of attorney. These documents all serve different functions, although, all have a common interest of protecting you, loved ones as well as your assets. No matter what financial or medical situation you are, you should prepare to start making your estate plans. Planning now for the future with an estate attorney would never be regretted. Preparing now for the future over your financial and medical affairs would save you and your loved ones a whole deal of stress and troubles.
To prevent intestacy distribution of assets
When an individual dies without leaving instructions regarding his or her estate, then the State in which he or she had lived or owned assets would have to step in to decide what happens to those assets. There are probate laws known as laws of intestacy which influence the court’s decision on how such assets would be distributed. These intestacy laws recognize the closest surviving blood relatives of the decedent as the bona-fide heirs to the estate, therefore the estate would go to your spouse and kids (if they be alive), in proportions fixed by the state.
The downside to this is that, those who you want financially cared for would not receive a dime from your estate so long they do not belong to your immediate family. Also, that loving child of yours whom you desire to have received the largest portion of your estate may not get to do so, as long as these proportions are already fixed by State laws. Also, your minors would not get their inheritance until they attain the age of 18. Intestacy laws vary from state to state and as such, there is need for a surviving family of a deceased to hire an estate planning lawyer in the state or county which the decedent had resided.
To protect beneficiaries
There are reasons why you need to put together an estate plan to protect beneficiaries. You can protect a minor or adult beneficiary from bad decisions, creditor’s problems, etc. With an estate plan also, you can name a desired guardian and guardianship relationship for your minor children.
To avoid excessive estate taxes and to protect assets
One great motivation for you to have an estate plan is estate taxes as you can lose a significant amount of your estate to the payment of state and federal estate taxes or state inheritance taxes. Through living trust, and other advance state planning techniques you can reduce estate taxes and even cut it off although. Estate planning also ensures that your assets are protected and secured.
Important estate planning documents you need to have:
A will is a document which designates the beneficiaries of your estate upon your death, its executor, a guardian for your minors, and transfers your “pour-over” assets into a Revocable Trust.
- Revocable Trusts
All assets transferred into a revocable trust will pass on to beneficiaries through a trustee without the publicity and fees associated with probate. You can take advantage of death tax credits and assets protection with revocable trust by establishing trusts for your surviving family, thereby bypassing death tax or claims from creditors.
- Durable Financial Power of Attorney
A Durable Financial Power of Attorney appoints a fiduciary to manage your estate affairs upon your incapacitation, without having to go through the court process of Guardianship application.
- Health Care Power of Attorney
This designates an individual to make medical decisions on your behalf during incapacitation.
- Living Will
With a living will, you can avoid being put on life support or hydration when you become terminal or an unending vegetable state.