ESTATE PLANNING
Planning an estate takes into consideration a person's assets and how they will be distributed after their death. Creating a will and choosing an administrator to manage the estate are only parts of the process. Planning an estate takes time and must be done in accordance with the laws of the state in which the person resides. A person can divide their assets however they choose and by effectively planning their estate, they can assure their wishes are carried out.
PROTECTING A PERSON’S ASSETS
Estate planning is more than just dividing up bank accounts and personal possessions. The planning process also protects a person's assets including business interests and financial holdings. People who own substantial amounts of property or have large financial investments in large corporations often want their family members to take control of their assets. Others may choose to support charitable organizations. An efficiently planned estate distributes assets accordingly while preventing financial loss or misuse.
THE PURPOSE AND BENEFITS OF ESTATE PLANNING
The purpose of planning an estate is to protect a person's assets and distribute them as dictated in their will. Planning an estate prevents third parties from acquiring possessions from an individual's estate without following legal protocols. While taxes and debts must be covered before the distribution of assets, an individual uses an estate to make sure all property is divided up according to their wishes. One of the most important benefits of planning an estate is to protect the future of a person's loved ones. The financial legacy an individual leaves behind can help their family maintain the lifestyle they are accustomed to.
WHO IT’S FOR?
Estate planning is not just for individuals with substantial financial holdings. It is important to create or select a health care proxy, medial power of attorney, 401k / life insurance beneficiary designations, cohabitation agreements and guardianship for your children. Individuals who have earned a large amount of money or have vast investment holdings can use those assets to provide for their family after they have passed on. Business professionals can use estate planning to ensure the future of their company is secured and placed in the hands of individuals they have chosen. Anyone who has assets can benefit from planning their estate.
FOLLOWING THE RIGHT STEPS
There are several steps included in planning an estate. Determining the amount of an individual's assets, deciding who controls those assets and fulfilling all legal obligations pursuant to the estate are valid steps in the probate process. Once the will has been filed and the estate opened, any fees and taxes that are due and owing must be paid prior to the distribution of the assets to the chosen heirs. An administrator, chosen by the deceased and named in the will, must make sure all legal obligations are taken care of and any conditions within the will are met.
RISKS OF NOT PLANNING
Individuals who do not plan their estates run the risk of their financial holdings being lost to family members or business associates. When a person does not create a will, their financial holdings can be held in limbo for months, sometimes years, until probate attorneys can determine who should receive control of the assets. Another risk of not planning an estate is the ability of third parties to come in and lay claim to portions of the estate. Legal battles can take years to resolve, costing both sides considerable time and money.
INTESTACY
Intestacy occurs when a person dies and has no valid Last Will and Testament on file with an attorney or the courts. It also means the value of any assets and holdings was greater than the amount of debt levied against the estate. If a person's estate is said to be intestate, their assets are divided up according to the inheritance laws of their state. With no will to declare who receives what, probate officials will often divide assets equally among those who qualify as heirs. Certain states divide assets by percentage.
INHERITANCE
Estate planning determines the amount of inheritance each individual receives. Many estate planners include a fund within the will to cover the cost of any inheritance taxes incurred by the heirs. An inheritance is determined by the deceased and distributed to individuals who are listed as heirs within the will. An inheritance can take the form of cash money, material possessions, bonds or investments.
Planning an estate is just one way of securing a person's assets and protecting them from loss. Taking care of an estate involves many legal processes and should be handled by a lawyer or attorney well versed in probate law.
