Estate planning is the act of preparing for the transfer of a person’s wealth and assets after his or her death. Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all part of one’s estate. Estate plans must be written, signed, and notarized by the person who owns the estate.
Who Needs An Estate Plan? (hint: Everyone!)
Many people think they don’t need a will or an estate plan because their assets will automatically go to their next of kin. However, without a will, your property will go into probate and your wishes can be contested by anyone related to your estate. And even a will is often not sufficient. Wills simply list your intentions for burial and who you plan to give your money and property to. However, the money must still pass through probate which can cost thousands of dollars. There are executor fees, court fees, recording fees and attorney fees. A will also does not alleviate the problem of estate taxes. With an estate plan, you can have more control over who steps in for you when you need it, who gets your assets and how they can use them. A good estate plan will also streamline the process for those you leave behind, minimizing their time in court and legal fees. I’ll sit with you, explain your options, draw up your documents and then carefully explain those documents to you.
For some clients, creating trusts are recommended. Establishing a trust can prevent some or all of the estate taxes that would otherwise be owed upon your death. A trust allows a person to transfer legal title of his or her property to another person while they’re still alive, potentially saving thousands in taxes.
A trust also gives the trustee (the person acting on behalf of the decedent) the authority to distribute assets immediately to the beneficiaries based on the terms of the trust. No court is involved, so there are no probate fees and no public record of the value of the estate. Many financial advisors urge clients to have trusts, especially those who live in states where probate fees are especially high or if the client owns a home or real estate.
Some areas of Estate Planning which you may want to discuss:
- Business Succession Planning
- Charitable Planning
- Estate Administration
- Medical Directives & Powers of Attorney
- Estate Tax Planning
- Life Care Planning
- Probate Matters
- Special Needs Planning
Estate Planning Vocabulary
Wills can leave instructions as to how you would like your property distributed and who will be in charge of distributing it. Among other things, a will can also be used to appoint guardians for your children.
Durable Power of Attorney is a document which allows you to appoint someone that you trust to handle your financial affairs if you are incapacitated.
Health Care Proxy is a document which allows you to appoint someone that you trust to handle your medical decisions if you are incapacitated.
Homestead Declaration is an official document that allows homeowners to protect equity in their principle residence in the event of financial hardships.
Trusts serve many purposes. You may want to make sure the people to which you leave assets do not squander it away. If you have children you may want to dictate how your children will be provided for and how assets are used (education, automobile, weddings, to name a few). Without a trust, a child turning 18 may be given an entire estate, including life insurance proceeds. This may not be an ideal situation. Trusts may also help to alleviate some estate taxes and also be beneficial in some healthcare situations. There are many different types of trusts for many different purposes.