Estate planning is the preparation of tasks that brings together a person’s belongings in the event of their incapacitation or death. The planning includes not only the bequest of assets to heirs but also the settlement of estate taxes. Most estate plans are set up with the help of an attorney, or another educated professional. The value of an estate’s assets will typically determine whether a will, revocable trust, or irrevocable trust (also known as an asset protection trust) is necessary.
There are various reasons why you may need an estate plan. If you have young children or are expecting a new child, then you want to ensure you have a guardian put into place should you pass away. This will ensure that your children are cared for, and for other important matters such as how they are raised.
Another reason why you may want to set up an estate plan is to avoid probate. The probate process is expensive and can cost several percent of an estate’s value. Along with savings, it can save your beneficiaries a lot of time, and prevent loss of privacy. This is because probate proceedings are public. This means everything you own, and those who plan to receive it, will be made public. If you avoid probate, this will not happen.
When you pass away you may want to ensure that the causes you care about are taken care of. Estate planning allows you to maintain your philanthropic goals as well.
This is essential if you want to make sure that your family inherits your property.
Placing your property in a living trust means that your survivors won't have to go through probate court.
If you become unable to make medical decisions for yourself then you will want to have health care directives put into place. This includes creating a living will, and setting your power of attorney for health care.
This allows you to give one person the authority to control your finances. Once again, this is essential if you become incapacitated and unable to handle your own affairs.
This can be done by placing an adult in charge to handle all of the money or property that your children will inherit should you suddenly die. This may be the same person as the guardian in your will.
Ensure that your accounts are "payable on death" to your beneficiary and allows the funds to skip the probate process. In New Mexico, you can register your stocks, bonds, or brokerage accounts to transfer to your beneficiary upon your death.
Especially if you have a good amount of wealth or if you have young children, you may owe substantial debts when you die. This will pay off those debts and protect your family.
This might include funeral arrangements, organ and body donation plans, and plans for the disposition of your body.
If your children are minors, then your estate plan can instruct who will take care of them and how they will receive your assets. It can also protect them from recrimination and other negative aspects that occur after death.
If you plan ahead, then this can allow you to reduce the tax burden that might otherwise pass down to your beneficiaries. Using specific tax-planning strategies such as strategic charitable giving can help you mitigate the tax bite as well.
Even though your family may always get along, death brings out the worst in people, and so does money. This is why it’s essential you set an estate plan and write a will. This will state how the assets are distributed and there will be no squabbling.
Part of the value of the will is telling people how you feel about them. If you always wanted someone in your family to have a specific item, now is the time. Put it all in your estate plan and spell out your dying wishes.
Probate is expensive and a huge pain. By setting up a plan your family can avoid probate altogether and keep your assets private.
Drafting a will is a lesser version of estate planning. This will only cost around $150-$400. If you plan to hire a lawyer for estate planning this will at a minimum cost you $1500 in start up fees, but may even be a bit more depending on the size of your estate.
Estate planning can help prevent many problems that occur with death. Although they are essential for those who have a lot of money, even if you do not have a lot of money you can benefit from an estate plan. If you determine how you plan to handle your estate before you die, you can save your loved ones the hassle. Having a will is one way to go about this, but if you wish to save your loved ones the hassle of probate, an estate plan is essential.