What is the main benefit of Estate Planning?
While there are many benefits to setting up an Estate Plan, the main reason is distribute your assets according to your wishes. If you do not, the State will decide who gets what without consideration as to how you would have wanted it.
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What does an Estate Plan include?
A proper Estate Plan will be shaped and molded to your particular family needs. However, most plans revolve around a Living Trust. The rest of the package includes, a Pour Over Will, Power of Attorney for Financial Management, and a Health Care Directive.
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What is a Will?
A Will is a legal document which names individuals which will receive your assets upon your death. It will also nominate the Executor of your estate – the person who will manage your estate and distribute your assets to your named beneficiaries. The main drawback of Wills is that your assets must go through probate.
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What is Probate?
Probate is a court action where it is determined who gets the assets in your estate. It can be very costly. The probate costs for an estate of $1,000,000 might be $20,000, and could be much higher. The other factor in probate is time. It could easily take eighteen months or more for your case to wind through the courts. Probate records are also public information.
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What is a Living Trust?
A Living Trust is a legal document which holds your assets in trust and is administered by your trustee during your lifetime (you would be the trustee is most cases), and transfers your assets to your beneficiaries upon your death. One of the main benefits of the Living Trust is that there is no need for court intervention at any stage. Probate is therefore avoided. Since there is no court action, the whole process is private.
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Will this help me provide for my minor children?
Yes. You can name a guardian for you minor children and specify how you would like them to be cared for. Otherwise the court will appoint someone who will make all the decisions about their upbringing without regard to your wishes. You can also arrange for your children to get their share of the estate in stages: 1/3 at 18, 1/3 at 21, and 1/3 at 25 for example.
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Are there any benefits to Estate Planning while I’m still alive?
Yes. You can designate who would make medical and financial decisions for you if you were to become disabled or incapacitated. You can have someone you trust pay bills and do banking for you during your incapacity. You can also spell out your wishes regarding life sustaining medical treatment and other medical issues that are important to you. You can also leave instructions regarding organ donation, burial issues, and disposition of remains.
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How can Estate Planning help me with estate taxes?
If you are subject to estate taxes, up to %45 (at current rates) of your assets will go to the government instead of your loved ones. Estate Planning can arrange assets in such a way as to maximize your deductions, and minimize any taxes. Sophisticated planning techniques can be utilized which could save your heirs hundreds of thousands of dollars depending on the size of your estate.
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