Protect Your Loved Ones with Estate Planning

By going through the estate planning process, you can effectively help protect your loved ones in the future. You need an estate plan to help govern what goes on with your assets following your death. Here are the basics of estate planning and what you should be trying to accomplish with it.

Estate Planning

Many people think that they do not need to worry about estate planning because they do not have significant assets. However, everyone, regardless of how much money they make, should have some type of estate planning. A good estate plan will have a will, assignment of power of attorney and a medical power of attorney. These elements will successfully help govern your decisions when you are unable to do so.

Importance of Wills

A will is an extremely important document for you to create. A will is necessary in order to help distribute all of your personal assets. You have to decide where you want your money, your real estate and other possessions to go. If you have children, you also need a will in order to determine who will take care of them when you die. If you die without a will, it can be very frustrating and costly for your heirs. This is known as dying intestate. They will have to go through the probate court process and let the courts decide where everything goes.

Trusts

Something else that you might choose to include in your estate planning is a trust. A trust is a legal entity that you can leave your assets to when you die. The trust will then be in charge of distributing your assets as you choose. You can put restrictions on how soon your loved ones have access to your money. Many people think that trusts are reserved for the wealthy. However, anyone can benefit from using a trust.

Tax Considerations

Whenever you are deciding where all of your assets will go, you need to consider the tax implications that are involved. You want to minimize the impact that taxes have on your ability to give assets to your loved ones. Depending on when you die, there may be an estate tax. The government constantly changes how much you can have in your estate without paying taxes on it. Regardless of how much money you have, you can leave it all to your spouse without paying any taxes on it. However, this has the effect of increasing your spouse's estate and making it harder for him or her to decide what to do with the assets.

Goals of Estate Planning

The main goal of estate planning is to help eliminate confusion when you die. You can talk to your loved ones and tell them your wishes while you are still alive. However, disputes will still inevitably arise if there is no documentation of your wishes. Another goal of estate planning is to eliminate the need to go through probate court. That can get very costly and draw unwanted attention to your family members.

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