ESTATE PLANNING
10 Things Estate Planning Can Do for You
What are the advantages to estate planning?
By taking the time and effort necessary to plan your estate, you will be able to:
Provide for your immediate family
Couples want to provide enough money for the surviving spouse. Couples with children want to assure their education and upbringing. If you have children under 18, both you and your spouse should have a will nominating personal guardians for the children, in case you both should die before they grow up. Otherwise, a court will decide without your input where your kids will live and who will make important decisions about their money, education, and way of life.
Get your property to beneficiaries quickly
Options include insurance paid directly to beneficiaries, joint tenancy, and living trusts, as well as using simplified or expedited probate and taking advantage of laws that provide partial payments to beneficiaries while a will is in probate.
Plan for incapacity
During estate planning, you can also plan for possible mental or physical incapacity. Living wills and durable health-care powers of attorney enable you to decide in advance about life support and pick someone to make decisions for you about medical treatment.
Minimize expenses
Good estate planning can keep the cost of transferring property to beneficiaries as low as possible, leaving more money for your beneficiaries.
Choose executors/trustees for your estate
Choosing competent executors/trustees and giving them the necessary authority will save money, reduce the burden on your survivors, and simplify administration of your estate.
Ease the strain on your family
You can take a burden from your grieving survivors and plan your funeral arrangements when planning your estate. Or you may want to simply limit the expense of your burial or designate its place.
Help a favorite cause
Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, and at the same time take advantage of tax laws designed to encourage private philanthropy.
Reduce taxes on your estate
Every dollar your estate has to pay in estate or inheritance taxes is a dollar that your beneficiaries won't get. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government.
Provide for people who need help and guidance
Do you have an elderly parent or disabled child, or a grandchild whose education you want to assure? You could establish a special trust fund for family members who need support that you won't be there to provide.
Make sure your business continues smoothly
If you have a small business, you can provide for an orderly succession and continuation of its affairs by spelling out what will happen to your interest in the business.
Provided By: http://www.americanbar.org
The basics of estate planning
With regards to finances, the future is a big part of many people's financial planning efforts. Be it the kids' college tuition or the day when retirement finally arrives, financial planning is all about the future.
Though college and retirement funds garner the most attention, men and women must also make time for estate planning. Estate planning is the process of arranging for the disposal of an estate and is done to help minimize uncertainty upon an individual's death. This planning also reduce taxes and additional expenses that might arise if a person passes away without having left a will or another means of disposing of his or her estate. Regardless of the size of an individual's estate, there's no reason not to have an estate plan in place. The following are some of the basics of estate planning, which should be a priority for men and women, young and old.
More than just a will
An estate plan is more than just a will. Though an up-to-date and specific will is an important element of a good estate plan, there are other elements as well. In addition to a will, an estate plan should assign power of attorney, which gives a person of an individual's choosing the right to manage that individual's financial affairs if they are unable to do so themselves. Power of attorney should be assigned in the case of a person's death, but also if an unforeseen medical issue arises and a person is no longer capable of managing their affairs.
There are two types of power of attorney that are essential to know when estate planning. Springing power of attorney goes into effect when circumstances that the individual specified, such as incapacitation, occur. In order for this to go into effect, the agent designated must typically produce proof of an individual's incapacitation. Durable power of attorney goes into effect immediately and the agent does not need to prove incapacitation. When choosing an agent to assume power of attorney, individuals need to make this decision wisely, choosing someone they trust who can competently manage their affairs.
Assessing your assets
Assets include a host of things, from investment accounts to real estate to retirement savings. Individuals must take careful inventory of all of their assets and determine to whom these assets should go if they die or who should gain control of them if individuals become incapacitated. This means leaving no stone unturned. If there are any questions about specific assets, then legal wrangling or even government taxation upon these assets is likely to take place.
Understanding trusts
Many people hear the word trust associated with financial dealings and immediately assume it only applies to the wealthy. Nothing could be further from the truth. A trust enables men and women to put conditions on the distribution of their assets upon their death, including when and how these assets will be distributed. In addition, a trust might just protect these assets from creditors or lawsuits and help any heirs avoid probate court, which can be a costly and tedious process. Though trusts aren't necessarily for everyone, they also aren't exclusive to the very wealthy.
Allocation of assets
Many people make the mistake of leaving all of their assets to their spouses upon their deaths. While this is well-intentioned, it doesn't always work out best for men and women with children. Individuals can leave an unlimited amount of money to their spouse upon their death, and that money cannot be taxed. However, when the surviving spouse dies, if he or she leaves that money to their surviving children, then they are likely going to pay significantly more in estate tax. In addition, when deciding to simply leave all assets to a surviving spouse, this is, in a sense, leaving the difficult decision of asset allocation to the surviving spouse. What's more, should both husband and wife pass away in an accident at the same time and all assets were left to a spouse, this can make it very difficult, contentious and costly for surviving family members to divide up any assets left behind.
Estate planning is something few people will embrace with open arms. But as morbid as estate planning might seem, it's a necessary step for adults who want to secure their own futures should they become incapacitated or the futures of their loved ones when individuals pass away.
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