A sound estate plan could prove vital to ensuring one’s financial future, protecting against unforeseen events and ensuring the well-being of future generations. That said, authoring such a guide can be a time-consuming and complex process. Ergo, retaining the services of an experienced probate lawyer might help complete this important process with greater efficacy.
Estate Plan Overview
An estate plan can cover a significant amount of ground. One component of such an outline can govern how the author’s assets are to be dispersed during and after their lifetime. Other components could detail how they wish to be cared for should they one day no longer possess the capacity to manage their own affairs.
Regardless of the specific estate plan an author wishes to establish, the completion of certain legal and financial documents are often pertinent parts of said arrangement. Such documents include”
Last Will And Testament
Sometimes known simply as a will, this legal instrument dictates a deceased person’s final directives. Actions to be carried out by the Executor, the individual the author names to carry out these instructions, often include remitting lingering debts, paying the decedent’s final income and estate taxes, identifying heirs and dispersing remaining assets to rightful heirs.
Durable Power Of Attorney
A durable power of attorney enables the individual authoring the document to nominate a trusted family member or associate to execute important legal or financial functions in their stead. Typically, the designated power of attorney will act on someone’s behalf if the individual in question falls ill or becomes mentally incapacitated. The specific duties the designee is entrusted to perform can vary from author to author. However, common actions might include paying debts, managing and selling property, signing important documents and rendering legal decisions.
A healthcare proxy is similar to a power of attorney in that said designation enables the author to designate someone to render important medical decisions on their behalf in the event they lose the ability to execute such decisions themselves.
Many estate plan authors hold life insurance policies, investments or various accounts in financial institutions like banks or brokerage houses. Many of the establishments housing said holdings offer the owner the provision to designate a beneficiary upon their death. This process is usually completed when the account holder declares they wish to make such designations and fill out the appropriate paperwork.
Payable On Death Designations
Many investments and financial institution accounts will allow the owner to designate a payable on death transfer order. Such designation could prove valuable in that accounts given this distinction are typically not required to pass through the probate process upon the holder’s death.
Some individuals choose to place the entirety of their assets into living trusts, which are overseen by a designee known as a Trustee. Upon the asset owner’s passing, the Trustee distributes holdings contained within as per the trust creator’s instructions.
Prior to beginning the estate planning process, prospective authors are strongly encouraged to consult with a probate attorney or another professional with estate planning experience. Said individual could help the author perform crucial tasks like identifying the entirety of their assets, understand important tax laws and other financial issues that could impact how great a percentage of the estate loved ones can rightfully claim and potentially identify disputes that might arise amongst heirs.
Benefits Of Authoring An Estate Plan
Once an estate plan is established, said financial and legal instrument could have a profound impact upon the author and their family. Specific benefits include:
Ensuring Loved Ones Not The State Claims Assets
Authors with large estates or significant assets might be subject to remittances known as estate taxes. The specific amount of estate taxes to be levied will vary from state to state and depend upon several factors. However, in certain instances, large estates valued at specific monetary amounts stand to pay a significant amount. An astute financial planning professional might know certain loopholes that may afford their client or their heirs to ability to circumvent this potential pitfall.
Providing For Their Own Needs
Sometimes, authors might designate funds to cover long-term care should they become physically or mentally incapacitated in their later years. Long-term care is often quite expensive and allocating funds for such purposes has the potential to preserve a significant percentage of an estate’s total value or prevent those requiring such care from being thrust into financial distress.
Creating A Legacy
Certain individuals yearn to leave a percentage of their assets to various charitable endeavors following their passing. Ergo, estate plans are often comprised of benevolent contribution schedules that enable the deceased to establish a long-lasting legacy.
Inspiring Financial Responsibility
Many people hold off on creating an estate plan because such action can be tedious, difficult and forces the individual in question to face their own mortality. That said, taking the proverbial plunge and following through on this important effort might inspire family members and other close relations to examine their individual circumstances and execute actions designed to preserve their financial standings.
Avoiding The Probate Process
When someone dies, their will must be reviewed by a probate court in the municipality within which they resided. Should the legal instrument be overseen by a reputable attorney, signed by several witnesses and notarized, the adjudicating body will typically initiate the probate process quickly.
That said, with large estates or those with disputing heirs, this process could take months and, in some cases, years to resolve. Astute estate planning in which payable on death or transferrable on death designations are tagged to certain holdings often prevents said assets from passing through probate. Under such circumstances, rightful heirs receive available funds with far greater expediency.
Limiting Chances For Family Disputes
In many cases, estate planning enables the author to allocate assets carefully and with relative equity. Executing such action by exercising significant thought and caution may decrease the risk of disputes amongst heirs.
Alleviating Family Burdens
Coping with a loved one’s passing is a difficult enough experience. Astute estate planning relieves family members from taking on the added burden burdened of perusing through and organizing the deceased’s assets. Finding the right estate planning attorney to help you through the process is also recommended.
Interesting related article: “What is your Last Will & Testament?“