ESTATE PLANNING INFORMATION
This page provides information about estate
planning as well as information about related topics such as
wills,
probate law, retirement
plan, disability, and death. The estate planning process requires
that you consider a wide range of legal, financial, emotional, and
logistical issues.
What is an estate? What is estate
planning?
An estate is the total property, real and
personal, owned by an individual prior to distribution through a
trust or will. Real property is real estate and personal property
includes everything else, for example cars, household items, and
bank accounts. Estate planning distributes the real and personal
property to an individual's heirs.
Estate planning process
Estate planning is the process by which an individual or family
arranges the transfer of assets in anticipation of death. An estate
plan aims to preserve the maximum amount of wealth possible for the
intended beneficiaries and flexibility for the individual prior to
death. A major concern for drafters of estate plans is Federal and
state tax law.
Wills and trusts are common ways in which individuals dispose of
their wealth. Trusts, unlike wills, have
the benefit of avoiding probate, a lengthy and costly legal process
that oversees the transfer of assets. Sometimes, though, it will be
useful to make inter vivos gifts (gifts made while the donor is
alive) in order to minimize taxes. The Federal Gift Tax exempts
certain levels of lifetime gifts.
What does estate planning involve?
Estate planning
involves the drawing of a plan of administration and disposition of
one's property before or after death in the manner that most
efficiently and effectively accomplishes the testator's objectives.
Estate planning also involve the use of tax minimization tools and
techniques to provide the greatest possible financial security for
an individual as well as his or her beneficiaries.
When should I start estate planning?
The best time to start estate planning is while you have legal
capacity to do so. If you wait until you are seriously ill, or
suffering from other disabilities, it could affect your legal capacity,
and your plan may be effectively challenged by
those who assert that you lacked legal capacity, or were subjected
to fraud, coercion or undue influence, all of which are requisites
for the invalidation of a will or estate plan. Therefore there is no
better time to start an estate plan than now.
The purpose of estate planning
The purpose of estate planning is to avoid dying intestate.
Dying intestate means dying without having created either a will or
a trust which provides instructions for passing your estate on to
your heirs.
Dying intestate is like taking your property and attempting to
throw it to your heirs on the other side of a deep chasm, a chasm
which is filled with hazards. These hazards (probate, creditors,
con-artists, lawsuits, judgments, lawyers, and death taxes) can
damage much or most of the value of your estate.
All property owners have done some estate
planning for the distribution of their estate to their heirs whether
they are aware of it or not. Without a will or a trust the
inheritance laws (laws of intestacy) of your state will determine
how your property will pass to your heirs. If you have no heirs that
fit the state's formula, the assets will be taken by the state.
Often times the state's formula and rules for moving assets to your
heirs will not be what you would have chosen if you had done some
planning.
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