Estate Planning is a process of anticipating management and disposal of a person’s asset, during his or her life time, in case of incapacity or death. It includes the inheritance of decedent’s assets to his heirs and the settlement of estate taxes. Everyone regardless of wealth who want to secure their families and loved ones should have this done. It can help to reduce or eliminate uncertainty over the administration of an estate or of probating one’s will.
Documents part of the estate planning
Following documents are commonly used for legal disposition of assets after one’s death or incapacity and reducing unnecessary transaction. These tools are discussed hereunder:
The Last Will and Testament is probably the most important estate planning tool which should be commonly used as the simplest device for assuring disposition of an estate. It is usually created and executed in accordance with laws of respective jurisdiction.
A Trust is also used as an important tool for estate planning for distribution of wealth and assets after death of the person who creates the trust. Usually the Trust is used to ensure distribution of funds for the benefit of minor child or a disabled person. The creation of a Trust offers a high degree of control over the management and disposition of assets of the deceased person. Guardians can be named for minor children, directives as to their education or other specifics can be provided for in the Trust. It is also possible to protect wealth for several generations after one’s death by adding certain provisions.
An important feature of the estate planning is that by creation of an advance directive the security of legally incapacitated person’s estate can be ensured. A health care proxy, a durable power of attorney and a living will are documents necessary for people to have.
Importance of Estate Planning
Most of the people do not devote sufficient time for estate planning. Planning for your children’s future, your most beloved assets, your money that you worked so hard for is more important than planning a vacation or buying a new car. It can put long lasting impact on lives of one’s loved ones after his or her death. Unfortunate things happen all the time. Some of the main benefits of estate planning are as follows:
- Estate Planning prevents wealth from going to unintended beneficiaries
- Secures future of families with young children which would be too difficult in absence of proper estate planning.
- Estate planning saves the heirs from undue time in court and taxes.
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