More than 55% of surveyed Americans reported they don’t have a will. The process of estate planning is emotionally and physically draining, which is discouraging. Yet, you need to have a plan on how you want your loved ones to handle your estate upon your demise.
Contrary to what many people perceive, your estate goes beyond your real estate assets. It involves all personal property, bank accounts, life covers, and stocks. Failure to have an estate plan can lead to chaos.
Are you wondering what is an estate plan? If so, then read on to learn everything you need to know.
What is an Estate Plan?
Estate planning encompasses plans for estate transfer after death. Estate planning isn’t only for the affluent. If you want to provide for your loved ones adequately, you need to plan how your beneficiaries will handle your property.
Your estate is all you own from your home to other possessions, such as jewelry. With an estate plan, your lawyer will ensure that your heirs follow your instructions to the letter.
An estate plan has several facets that apply before and after you die. Some of the instructions include the care you’d want to receive when you age and can’t perform optimally. Besides, you can incorporate some of your values in the plan, such as hard work and education to guide your heirs.
A good estate planning ensures that you provide sufficiently for your loved ones with special needs and minors. It further incorporates guardians, who are responsible for minors’ inheritance. You need to keep updating your estate plan to include the changing financial situations and family structure.
One of the terms that you might come across in estate planning is power of attorney. It refers to an organization or a person that handles your affair when you’re incapacitated. Your appointed representative is an agent or an attorney-in-fact.
You might also come across the term trust. It is an arrangement that involves entrusting a property to an organization or an individual on behalf of your beneficiaries. Understanding the terms is crucial in estate planning.
Why do I need an Estate Plan?
You don’t have to wait until you are in your old age to plan for your estate. In fact, estate planning should start as soon as you hit 18 years. You can keep updating your plan as you accumulate more wealth.
Get a qualified team of lawyers in estate planning. The benefits of planning your estate legally are worth pursuing.
1. Reduction of Estate Tax
When you have an estate plan, you won’t be subject to heavy state inheritance taxes or federal estate taxes. What’s more, a couple can eliminate these taxes by establishing ABC Trusts to be part of their revocable living trusts or their wills. People have been embracing several techniques for advanced estate planning to reduce the taxation burden.
2. Avoid Probate
Probate is an expensive and long nightmare you would want to avoid at all costs. When your estate is subject to probate, your family can’t access cash immediately. It can be draining to have to scramble to pay for bills when your estate is worth millions.
Besides, probate exposes information about your beneficiaries, assets, personal representatives, and liabilities. Anyone can access your information easily. If you’ve been keeping your financial details private, probate will undo the effort.
An estate plan will save your loved ones the headache of probate. Ensure that you work with a recognized attorney. You don’t want to leave your family conflicting with the law.
3. Protect Beneficiaries
In the US, Massachusetts has the highest number of homeless families with children, which is about 1,959. Your loved ones can be victims of homelessness if you don’t have an estate plan. Malicious people can evict minors upon the demise of an adult.
Estate planning protects minor beneficiaries and adults who might be prone to uninformed decision making. A guardian can act on behalf of a minor. By the age of 18, a minor has the legal age to take over an estate.
If you understand what is an estate plan, you’ll make it a priority because it will address many family discords. With the inherent selfishness notable in humans, an estate plan ensures that every person gets the inheritance that a deceased person deemed appropriate.
4. Asset Protection
You need to protect your assets from lawsuits and other creditors. An estate plan is one of the strategies that will make your property inaccessible to creditors. Transfer your assets to your beneficiaries even when you don’t have a pending case.
Trying to have a plan in place when creditors are on your neck is too late. ABC Trusts can be ideal for spouses. You can also consider lifetime trusts for other beneficiaries.
Steps to Take in Estate Planning
When you’ve identified an accredited estate planning attorney, you can start the process of estate planning immediately. Writing a will and estate planning are inseparable. The first step involves making a will, where you specify your heirs and guardians for minors.
You can also consider a trust to avoid probate. You need a power of attorney for your finances. The trusted person can handle your affairs and finances if you lack the capacity.
Estate planning will also involve making healthcare directives. When you’ve advanced in age, you might need assistance in making healthcare decisions. This information should be on the plan.
Your end-of-life wishes should also involve funeral arrangements and expenses. Having life insurance is a decision you would want to consider.
Store your documents securely. Your agent will need access to documents such as trusts, wills, deeds, insurance policies, and any finance-related documents that can help in estate management.
Take the Necessary Steps to Get an Estate Plan
An estate plan is one of the crucial resources that your loved ones will appreciate in your absence.
You ought to have the right information before contracting a lawyer. Get a qualified estate planning attorney to guide you on the viable options.
Don’t wait until you are too old to have an estate plan. Your attorney will guide you through even as you create or update your plan.
Have you understood what is an estate plan? Do you need an estate planning attorney? Our online directory will assist you in finding the right attorney.