What is estate planning?
UPDATED: June 19, 2018
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Estate planning is the process of determining what will happen to your affairs and assets when you pass away or become incapacitated. Good estate planning will ensure that your assets are appropriately allocated and that your loved ones will continue to be taken care of in the event something happens to you. Involved in the estate planning process are such undertakings as: writing out a will, setting up trusts, establishing power of attorney, and other important steps.
Wills and Trusts
Estate planning means preparing for the disposition of your estate. Legal wills and trusts are among the most common tools used for this purpose. A will is a legal document that you draft in order to dictate how your estate (property, assets, etc) will be distributed when you are gone. When drafted well, a will can enable you to avoid the intestate process altogether (i.e. – the process in which a court of law dictates how your assets are distributed when you are gone).
Trusts are legal documents that are used to transfer property and assets from one person to another person (or entity). There are many different types of trusts, including living trusts, irrevocable trusts, family trusts and more. Though each is a different legal instrument, the common thread is that they are all designed to let you direct ownership of your assets, rather than letting the courts send assets to outside parties like creditors or the government (via inheritance taxes and the like).
Other Estate Planning Methods
Depending on the size of your estate, you will need to consider various alternatives for your estate plan. Think through your options and set up legally effective arrangements that meet your specific wishes. Good estate planning is more than just a simple will. Estate planning can also minimize taxes and fees, as well as set up contingencies to make sure your wishes regarding health care treatment are followed. For instance, if you ever become unable to give the directions yourself, someone you select could do that for you.
For more information on estate planning, or for help creating a will or trust arrangement, consult with an estate planning attorney. The benefits of hiring an experienced estate planning lawyer can vastly outweigh the costs when you consider what will happen to your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), or other property after you pass away.
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