Why Have An Estate Plan?
A recent study showed that in today’s economy, more and more people see estate planning as “discretionary” – something that can be put off until times are better. Unfortunately, disaster doesn’t know the difference between a bullish or bearish stock market, an employed versus unemployed person, or a younger individual versus an older individual. Simply put, the benefits of having a current, up-to-date estate plan far outweigh what happens if you don’t.
Let’s start with addressing what an estate plan does. An estate plan helps to document your preferences and instructions with regard to your financial affairs and more in the event of your incapacitation or death. The basic legal documents found in a typical estate plan include a last will and testament, a living will, a healthcare power of attorney and a financial power of attorney. Some individuals prefer to use trusts as a complement to, or sometimes in lieu of a last will and testament.
There are four components to a good estate plan, including:
- having proper legal documents for your situation
- a well organized catalog of all your important personal information and instructions for your family to access after your death
- a documented legacy – all the personal stories, accomplishments, and heritage information that you want passed to the next generation
- advanced communication – sharing your preferences, viewpoints and wishes with your loved ones.
People create estate plans for a variety of reasons. Some people have a strong desire to avoid probate. Remember, probate is simply the legal process whereby a court appointed person identifies all of your assets and liabilities and their value, pays your final bills, and distributes what’s left of your assets to your heirs according to law. Your probate officer is typically a close family member or friend, but can sometimes be an attorney or other professional. In some states, it’s actually quite a simple process. In other states it can be a little more complex.
If you want to know what strategies will help you better manage probate, a qualified estate planning attorney can assist you. He or she will make sure your beneficiary designations on your financial accounts and insurance policies are completed properly and will encourage you to consider various types of trusts.
Some people create an estate plan to make sure that their assets will be transferred in a tax efficient manner. Others who may be worried about creditors or the privacy of their estate settlement might find value in having a trust. Again, you’ll want to seek qualified legal assistance in creating an advanced technique like a trust.
Most importantly, an estate plan helps to ensure that your wishes and instructions are carried out in the manner you specify, that family harmony is maintained, and that your loved ones’ burdens in settling your affairs are minimized. Without a plan, the distribution of your property is provided for according to the law in the state where you resided or owned that property. Each state has this so called “intestacy law” which applies to individuals who die without a valid last will and testament. This body of law differs from state to state, but generally establishes an order by which your loved ones (e.g., spouse, children, parents, siblings, etc.) receive your property. This order may differ greatly from your actual intentions, which makes creating an estate plan one of the most important things you can do.
Provided by Greenberg Traurig
About the Author
Jeff has been the CEO of Senior.com for 12 years. Senior.com has grown under Jeff’s leadership, in fact when the website was first launched, the member base grew form Zero to over 700,000 in less the 3 years. Current, has over 1,600,000 registered members.
Jeff received his MBA degree in Managerial Finance and Investor Relations from the University of Phoenix and his Bachelor of Arts degree in Corporate Finance and Accounting from California State University, Fullerton.View All Articles