Estate Planning Basics
by Amy Nichols
You have probably accomplished a great deal with your
life. Over the years you have worked, planned and saved.
Perhaps you have even made some sacrifices to achieve your
current level of success. Its a sure bet that you will want
to pass along your accumulated assets rather than hand them
over for court costs, taxes or attorney fees.
Estate planning is the relatively simple process by which
you prepare legal documents outlining your wishes for your
estate upon your death. It can be difficult to plan for the
end of your life, but this planning is necessary to protect
your family and your assets.
What is your estate?
Your estate refers to your property, those things you own,
including your total assets and liabilities. Your property
includes your home, car, accounts (i.e. bank, retirement,
and brokerage), jewelry, insurance policies and so forth.
The language of estate planning
It is understandable that the idea of planning for your
family after die can be a little frightening. Familiarity
with the terms used in estate planning will help you begin
to develop some comfort with the process.
Estate: Refers to your property or those things that you
own.
Property: Includes two categories, real (as in real
estate/your home(s) and personal, which includes everything
else such as stocks, bank accounts, car(s), jewelry, and so
forth.
Intestate: Is a pre, or non-planning state. Dying intestate
means that you have died without creating a will or trust to
outline your desires for distribution of your estate. Trust:
Eliminates many of the financial risks in planning for the
transfer of your estate from you to your heirs upon your
death. Risks include taxes, probate, lawyers, creditors,
judgments, etc. A trust can provide for the management of
your estate if you become incapacitated as well reduce death
taxes and assure a smooth transfer of your property
according to your wishes. Trusts can be revocable or
irrevocable. Talk with your tax or legal advisor about the
benefits of each.
Probate: The process by which your personal property is
legally transferred to your heirs upon your death. The
probate process also identifies rightful heirs and
determines how your assets will be distributed among them.
Probate can be quite expensive (up to 10% of the net worth
of your estate) but the expense can be avoided with estate
planning.
Will: A written, legal document outlining your wishes for
your real and personal property upon your death. You can
also appoint a guardian for any minor children.
Beneficiaries: These are the people you assign to benefit
with distribution of your real and personal property upon
your death.
Your will can be an important tool of your estate plan. The
goal of the estate plan is to allow you, rather than probate
court and attorney, to maintain control of your assets.
Planning allows you the opportunity to set forth clear
directions and desires for your assets in the event of your
death or physical or mental incapacitation. Estate planning
is a necessary and painless process. You will afford
yourself peace of mind and you will smooth the road for your
heirs in terms of property transfer upon your death.
Amy Nichols is a freelance writer and contributing author
to
http://www.howtowriteawill.com, a site providing free
estate planning tips and information. |
