Some people devote more time to planning a vacation and choosing a car than they do estate planning. While it may not be fun to think about, it’s very important to have your affairs in place. Estate planning isn’t just for the wealthy either. You need to do some estate planning if you want to choose who will inherit your possessions. It also gives you the chance to choose your child’s guardian in the event of your passing. Reduce your taxes and also minimize the change of ugly legal battles and family strife with proper estate planning.
Today, it’s even important for middle-class families to have an estate plan. What happens when the family loses the breadwinner? Whether it’s a stock portfolio or real estate, without an estate plan, the courts will decide who gets what. Keep in mind that the courts will not automatically rule that the surviving spouse gets it all. Without an estate plan, you have no control over who gets what. With an estate plan in place, you get to name your heirs. However, you need to understand that just making a plan won’t work, it would need a proper execution as well. For this you will to understand the legal terms & conditions and then take the required steps. And for this you can take help of a corporate trustee who can help you manage your plans and goals.
An estate plan protects young children. No one wants to think of dying young, but you need to be ready for the unthinkable. Name your children’s guardians in an estate plan. If both parents die before the children turn 18, the courts will decide who will raise the children.
An estate plan spare heirs the big tax bite. Give them protection from the IRS. An estate plan will help create the smallest possible tax for your heirs. It can enable you to reduce much of the state inheritance taxes, state estate taxes and federal estate taxes. Without a solid estate plan in place, your heirs will wind up paying Uncle Sam a lot.
First Step for Estate Planning
The first step in estate planning is to take inventory of what you have. This includes real estate, jewelry, cars, stocks and a retirement portfolio. Then, you can decide how you want your possessions to be distributed. You’ll need to have the right tools in place to make this happen. The first instrument in your estate plan is to have a will. This will ensure that your loved ones get what you want them to get.
It may even be best to set up a trust. A trust is an addition to a will. Trusts can be funded with real estate, cash, bonds and stocks. It can provide income for life. You can also avoid probate with a trust. There are different types of trusts, and an estate attorney can help you identify your goals and choose the best one for you.
Second Step for Estate Planning
By designating a power of attorney, you can legally give another person the legal authority to act on your behalf for things like lawsuit management, real estate transactions, banking and insurance. The two types of powers of attorney are immediate power of attorney and springing power of attorney. The springing power of attorney becomes active when you are incapacitated or disabled. It’s common to have this type of power of attorney in an estate plan. Consider also designating a health care power of attorney. This person’s authority only begins when a doctor determines that you have lost the capacity to make health decisions. This person would then get to decide what type of treatment you get and whether or not you should have treatment.
Think about long-term care, too. Today, people are living longer. At some point, you may need long-term care at a facility, as home-care may not be enough. You can ease the burden on your loved ones is you have long-term care included in your estate plan. Discuss these types of matters with your loved ones beforehand.
Review Your Estate Plan From Time to Time
Anytime you have a major life event, you should review your estate plan. This includes a marriage or death in the family, a move, a new job, buying or selling a home and other significant life events. If your situation changes, you may want to consider changing your estate plan accordingly. Take out your estate plan and look it over. Even if you don’t have a significant life event, it’s wise to review your estate plan about every three to four years. You may need to change beneficiaries, administrators or successor trustees. And if you have a revocable living trust, be sure the titles of your assets are correct. Typically, irrevocable documents cannot be changed after it’s executed.
The Bottom Line
The bottom line is if you want your loved ones protected when you pass, you will need an estate plan. Don’t leave it up to others to make your decisions. A comprehensive financial plan can assist you with your estate plan. While you can do an estate plan on your own, it’s always wise to use an estate planning attorney for this task. This legal professional will know the laws and spend time with you to identify your goals. Not only can an estate planning attorney do all the paperwork for you, but they’ll also assist you through the entire process. This way, you have peace of mind knowing that everything is in order.