An estate plan provides protection against predators

When we pass away, everything we’ve worked our entire lives for is at risk of being stolen by the government and other entities. How does this happen? Well, there are a number of reasons, but it all boils down to not making a proper estate plan. A proper estate plan protects your money while you are alive and after you pass away. A good estate plan makes sure that your legacy is passed down to your beneficiaries and not stolen by the government and other predators.

So, let’s look at some of the most important things you need to have in an estate plan. The first is the Financial Power of Attorney. This is a document that allows you to designate who gets to access your bank accounts on your behalf if you are incapacitated in life. This is also the number one document used to abuse the elderly, as there have been multiple occasions of the elderly being manipulated into signing away their money. However, if you don’t have a Financial Power of Attorney, your loved ones will have to fight for the right to help you pay your taxes and bills. Thus, when your attorney is drafting your Financial Power of Attorney, make sure you specify that whoever you designate as your financial agent can only use your assets for your benefit and draft it specifically to protect you and your assets.

The second item in an estate plan is the Last Will and Testament. We’ve heard about this in movies, but what does it really entail? Contrary to popular belief, a Will does not prevent your loved ones from having to go to court and it does not fully protect your assets. A Will, by law, must be processed by the probate court and the probate process is a completely public process in which anyone - creditors, debtors, Medicaid - can step out to claim your assets, even if you have named beneficiaries.

One way to protect your assets from the probate process is to make sure you have beneficiaries on your bank accounts and life insurance policies. However, if your beneficiaries are minor children, your surviving spouse cannot access the money, even for the child’s benefit. On top of that, if you have a house, then there is no real way to protect it without the risks of probate court even as a married couple in Georgia. Some people recommend putting your house in your children’s name, but that results in him or her having to pay a sizeable capital gains tax - and he or she could potentially lose the house in a divorce, to their creditors or lawsuits.

So how do we avoid the probate court entirely? The answer is by creating a trust. If you put everything in a trust, then the Trustee will ensure that everything you own is distributed the way you want to your beneficiaries. The entire process is private and there is no need to worry about the probate court or capital gains tax. Advanced trusts will even protect your assets from your children’s divorces, creditors, and lawsuits. However, a trust only works if you set it up correctly, fund the trust, and maintain the trust during your lifetime but it is worth the time and cost to avoid probate and to protect your assets.

It may be difficult to think about what happens to our assets after death, but an estate plan is an essential part of any financial management. By making sure that your assets are protected in life and in death, you can have peace of mind about your legacy.